Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Grimsby Corporation (Grimsby and District Water, Etc.) Bill,

Read the Third time, and passed.

Ministry of Health Provisional Order (Ealing Extension) Bill,

Ministry of Health Provisional Order (Somerset and Wilts) Bill,

Lords Amendments considered, and agreed to.

Ministry of Health Provisional Order (South Nottinghamshire Joint Hospital District) Bill,

As amended, considered; to be read the Third time To-morrow.

Oral Answers to Questions — THE CORONATION.

Mr. Mander: asked the Secretary of State for Foreign Affairs whether, in view of the fact that the Coronation involves the crowning of the head of the State of seven members of the League of Nations and that official invitations have been issued to 51 other members of the League to be present, and that the policy of all parties in this country is declared to be based on the League, he will reconsider the advisability of inviting official representation of the League of Nations itself, either through the President of the Council, the President of the Assembly, or the Secretary-General?

The Secretary of State for Foreign Affairs (Mr. Eden): No, Sir, but, as the House is aware, the Secretary-General will receive an invitation to attend in his personal capacity.

Mr. Mander: In view of the fact that this is the first Coronation to take place

in this country since the establishment of the League of nations, does the right hon. Gentleman not think it might be a suitable occasion for setting a precedent, in view also of the policy of His Majesty's Government?

Mr. Eden: Yes, Sir. The Secretary-General is being asked.

Captain Plugge: asked the First Lord of the Admiralty whether arrangements are to be made for any of the officials and employés of His Majesty's dockyards to witness the Coronation; and, if so, whether he can give details?

The Civil Lord of the Admiralty (Mr. Kenneth Lindsay): A limited amount of accommodation, which includes seating and standing room, to view the Coronation Procession, has been placed at the disposal of the Admiralty for allocation amongst Naval and Marine officers on the active and retired lists, members of Queen Alexandra's Royal Naval Nursing Service, officers serving in the Royal Naval Reserve and Royal Naval Volunteer Reserve, and members of the civil staff, including minor, manipulative and industrial grades in London and at the outport establishments. Applications for seats are being received and the actual allotment of places has not yet been made. Standing spaces, which are free, and intended exclusively for minor, manipulative and industrial grades, have been allotted to establishments and will be allocated locally.

Captain Plugge: Can my hon. Friend tell me how many allocations have been made to Chatham Dockyard?

Mr. Lindsay: I am afraid I cannot give any figures.

Mr. Day: asked the Minister of Transport whether, in view of the large crowds that used the underground railway stations on the occasions of the Jubilee procession and the funeral of His late Majesty King George V, and the danger of accidents occurring to persons who may be crowded on to or pushed from the platforms on to the lines, he will consider making representations to the responsible management of the underground railway in order that only a limited number of persons consistent with safety should be allowed on the railway


platforms at any one time during the period of the Coronation?

The Minister of Transport (Mr. Hore-Belisha): I will bring the hon. Member's question to the notice of the London Passenger Transport Board.

Mr. Day: Can the Minister say when it is hoped to receive a reply?

Mr. Hore-Belisha: They are not dilatory as a rule.

Major-General Sir Alfred Knox: asked the Lord President of the Council what number of seats to view the Coronation procession has been allotted to the women's branch of the British Legion?

The Lord President of the Council (Mr. Ramsay MacDonald): Seats have not been specifically allocated to the women's section of the British Legion. There is a considerable allocation to the British Legion as a whole, but in accordance with the procedure applied to other organisations, the Legion have not been required to distribute these seats in any particular way. Special arrangements are being made to provide seats for representatives of the widows and mothers of those who fell in the War.

Sir A. Knox: Does the right hon. Gentleman not agree that this organisation is probably the most deserving organisation in the country, and will he use his great influence to obtain an allocation of seats to them to view the Coronation procession?

Mr. MacDonald: I am afraid that I cannot arrange for tickets for all organisations claiming seats to view the Royal procession. I prefer to express no further opinion on the matter.

Sir A. Knox: Is it not a fact that there are a great number of seats up the committee's sleeve which they can allocate?

Oral Answers to Questions — SPAIN.

Mr. Mander: asked the Secretary of State for Foreign Affairs whether he has any statement to make with reference to the cargo steamers, the "Auguste Cords" and the "Consul Cords," filled with arms and munitions loaded at

Bremen and bound for Spain, now in the port of Antwerp, in view of the appeal of the Spanish Government for action in the matter?

Mr. Eden: A note regarding these two vessels was received from the Spanish Ambassador on 17th March. In view of the fact that they were reported to be in Antwerp it was considered that the matter would best have been brought to the attention of the Belgian Government, within whose competence the matter appeared to lie. A reply in this sense has been returned to the Spanish Ambassador.

Mr. Mander: Has the Foreign Office any information on the subject of what happened?

Mr. Eden: It seems in any case to be a matter for the Belgian Government.

Mr. Arthur Henderson: asked the Secretary of State for Foreign Affairs whether he can state the number of British nationals captured by General Franco's forces and the treatment accorded to them?

Mr. Eden: No, Sir, His Majesty's Government are, however, making inquiries as to the treatment accorded by both contending parties to foreign prisoners.

Mr. Henderson: Has the question of the release of foreign prisoners of war been considered by the Non-Intervention Committee?

Mr. Eden: I could not say, but we have taken some action ourselves.

Mr. Henderson: asked the Secretary of State for Foreign Affairs whether he is now in a position to make a statement on the note received from the Spanish Government with reference to the presence of four Italian divisions in Spain?

Mr. Eden: I would refer the hon. Member to the reply which I gave to questions on this subject on Monday last, to which I am, at present, unable to add anything.

Miss Wilkinson: Has the right hon. Gentleman any information that Italy is proposing to send fresh troops to cover those defeated?

Mr. Mander: asked the Secretary of State for Foreign Affairs whether he has


any statement to make with reference to the recent transport of Italian and Abyssinian troops to Spain and, in particular, the movements of the rebel vessel "Domine" and the Italian vessel "Cesare" in this connection?

Mr. Eden: As regards the movements of the steamship "Domine," my information is that this vessel left Spanish Morocco early in February with several hundred North African pilgrims on board for the port of Jedda, and that, carrying the pilgrims on their return journey, she called at Port Said and cleared that port on 17th March for Benghazi and Ceuta. I have no information regarding the movements of the steamship "Cesare."

Mr. Mander: The right hon. Gentleman has not answered the general question at the beginning of my question. Can he say whether he is satisfied that there has been no movement of Italian or Abyssinian troops to Spain in the last few weeks?

Mr. Eden: There is another question on the Paper on that subject, but I may say that we have received within the last few days the most specific assurances from the Italian Government.

Mr. Mander: Can we accept those assurances?

Mr. Noel-Baker: asked the Secretary of State for Foreign Affairs whether, in the opinion of His Majesty's Government, the landing of members of the Italian army and air force with arms and munitions in Spain for the purpose of making war on the constitutional Government of the country before 20th February, 1937, did, or did not, constitute a violation of the Non-Intervention Agreement, signed by Italy on 28th August, 1936, of the Briand-Kellogg pact for the renunciation of war as an instrument of national policy, and of the Covenant of the League of Nations?

Mr. Eden: I have nothing to add to the reply which I gave to the hon. Member on Monday last.

Mr. Noel-Baker: Would not the position of the Government have been stronger if, in the investigations on this matter, they had always recognised the plain fact of violation of treaties and had protested against it?

Mr. Eden: My answer would depend upon the efficacy of the protest.

Mr. W. Roberts: asked the Secretary of State for Foreign Affairs what arrangements have been made by the Non-Intervention Committee for the appointment of officials to the Non-Intervention Board; and what is their number and their nationality?

Mr. Eden: In accordance with the decision taken by the Non-Intervention Committee on 8th March, the International Board is to consist of a chairman and eight members. By unanimous vote of the Non-Intervention Committee, Vice-Admiral Van Dulm has been appointed chairman, and the eight members have been nonimated to represent the Governments of the United Kingdom, France, Germany, Greece, Italy, Norway, Poland and the Union of Soviet. Socialist Republics.

Mr. Roberts: asked the Secretary of State for Foreign Affairs whether the attention of the Non-Intervention Committee has been called to the capture of a document, purported to be signed by Signor Mussolini, concerning Italian troops in the Guadalajara sector of the Spanish front; and, if so, whether any protest has been made or is being considered to this further evidence of the violation of the Non-Intervention Agreement?

Mr. Eden: I understand that the Non-Intervention Committee have no information regarding the capture of such a document.

Mr. Dobbie: asked the Secretary of State for Foreign Affairs whether his inquiry into the arrival in Spain of Italian troops is yet completed; and, if so, with what results?

Mr. Eden: I have no further information to give the House except that subsequent inquiries have established the fact that the case to which I referred in reply to a question by the hon. Member for Broxtowe (Mr. Cocks) on Wednesday last did not constitute a breach of the Non-Intervention Agreement.

Miss Wilkinson: Have we yet got any agreement or understanding from the Foreign Secretary that he has ever heard that there are any Italian troops in Spain? He has never said so yet.

Mr. Eden: I am afraid that the hon. Lady has not listened very carefully to what I did say.

Miss Wilkinson: On a point of Order. I have listened very carefully to every word of the Foreign Secretary. May I ask the right hon. Gentleman—

Mr. Speaker: There does not appear to be anything more to ask.

Mr. Mander: Has the right hon. Gentleman any statement to make with reference to the statement of Signor Grandi that these troops will not leave Spain until they have won the war?

Mr. Dobbie: asked the Secretary of State for Foreign Affairs the number of British diplomatic and consular officials now in Spanish territory; and whether they have sent, or have been requested to send, any information as to the landing of Italian troops since 20th February, 1937?

Mr. Eden: There are British diplomatic and consular officers at Valencia, and British consular representatives at 26 other towns in Spain. As regards the second part of the question, I cannot undertake to make public in existing circumstances the nature of all communications which may pass between me and His Majesty's representatives.

Lieut. - Commander Fletcher: (by Private Notice) asked the Secretary of State for Foreign Affairs whether he has any statement to make regarding the instructions of the Italian Government to their representative on the Non-Intervention Committee not to discuss the question of evacuation from Spain of non-Spanish nationals participating in hostilities there?

Mr. Eden: I am not at present in a position to add anything to the terms of the communiqué issued after the close of yesterday's sitting of the Chairman's Sub-Committee of the Non-Intervention Committee. The situation is under consideration by His Majesty's Government. In the meantime the remaining difficulties in connection with the commencement of the operation of the observation scheme have I understand now been resolved.

Lieut.-Commander Fletcher: Is it not the case that the Italian Ambassador stated that no Italian troops would be removed from Spain until the conclusion of hostilities there?

Oral Answers to Questions — JAPAN.

Sir John Wardlaw-Milne: asked the Secretary of State for Foreign Affairs whether he has any statement to make with regard to the recent declarations of the Japanese Prime Minister and Foreign Minister of the desire of their Government for friendly relations with Great Britain, and for a new starting-point in Japan's relations with China?

Mr. Eden: His Majesty's Government were gratified to read the speeches in which the new Japanese Prime Minister and Minister for Foreign Affairs expressed their desire for co-operation and friendship with Great Britain. His Majesty's Government, for their part, are equally anxious to do everything that may be possible to ensure friendly and harmonious relations with the Japanese Government. They will, moreover, welcome any improvement in the relations between China and Japan, holding as they do that the stability and prosperity of a China at peace with all her neighbours is desirable in the interests of those neighbours and of the world at large.

Oral Answers to Questions — EGYPT.

Sir J. Wardlaw-Milne: asked the Secretary of State for Foreign Affairs whether he has any information regarding the communication forwarded to the foreign legations in Egypt by foreign lawyers practising in the consular and mixed courts, and drawing attention to the dangers to their interests of the recent proposals of the Egyptian Government; whether a similar representation has been made to the British Ambassador; and what action the Government are taking in the matter?

Mr. Eden: I am aware that such a communication has been made to certain foreign legations in Egypt; His Majesty's Ambassador has also received a copy, and the attitude of His Majesty's Government is under consideration.

Sir J. Wardlaw-Milne: May I ask, as the point is not clear in the answer of my right hon. Friend, whether any representation has been received from British lawyers, or whether this is a copy of the representation from the foreign lawyers?

Mr. Eden: Perhaps my hon. Friend would put that question down.

Oral Answers to Questions — BELGIUM (FOREIGN POLICY).

Lieut.-Commander Fletcher: asked the Secretary of State for Foreign Affairs whether Belgium is seeking release from the reciprocal guarantees entered into by France, Belgium, and Great Britain in March, 1936, and from any previous mutual guarantee arrangement; and whether he has any statement to make regarding conversations between France, Belgium, and Great Britain as to Belgian neutrality?

Mr. Eden: I would refer the hon. and gallant Member to the answer I gave to his question on 17th March, to which I have nothing to add at present.

Mr. Bellenger: Have any discussions taken place on this subject during the visit to this country of a certain high person?

Mr. Eden: That question is covered by my answer.

Lieut.-Commander Fletcher: Does the right hon. Gentleman expect to make a statement after the Easter Recess?

Mr. Eden: I am afraid that I could not say when.

Oral Answers to Questions — ITALY (MEMORANDUM).

Lieut.-Commander Fletcher: asked the Secretary of State for Foreign Affairs whether he can now make any statement concerning the memorandum issued by the Italian authorities on the occasion of the visit of the head of the Italian Government to Libya?

Mr. Eden: So far as I am aware, it appears that the circulation of the memorandum in its original form was suppressed almost as soon as it had been isued, and an amended version given out from which passages offensive to foreign countries had been excised.

Oral Answers to Questions — LEAGUE OF NATIONS.

RAW MATERIALS COMMITTEE.

Brigadier-General Sir Henry Croft: asked the Secretary of State for Foreign Affairs (1) whether he is

aware that in the memorandum submitted to the committee for the study of the problem of raw materials at Geneva, document V., embodying proposals and suggestions, contains numerous suggestions which interfere with the sovereignty and administration of the Colonial possessions of the British Empire and include the transfer of territories at present under the British flag; whether these suggestions were circulated by permission of the representatives of Great Britain at Geneva; and whether he will give instructions that British representatives should make it clear that such proposals and suggestions are not open to discussion;
(2) whether his attention has been called to the fact that proposals and suggestions having no relation to the subject of raw materials, circulated amongst the members of the committee for the study of the problem of raw materials, include proposals from political bodies in Great Britain which have no official sanction or connection with His Majesty's Government and which even contain a proposal that Colonies should be transferred into Mandated Territories; and whether he will take steps to see that such proposals, in no way representing the Governments of Member States of the League, should be ruled out of future discussions;
(3) to what foreign policy reports, in document V., presented to the Committee on Raw Materials at Geneva, refer; whether such reports emanate from the Foreign Office; and whether he will make a categorical statement to the effect that Clauses 3 and 5 of proposals and suggestions are at complete variance with the policy of His Majesty's Government?

Mr. Eden: The "Foreign Policy Reports" referred to in the Secretariat Memorandum are reports issued twice a month by the Foreign Policy Association of New York, which is an entirely unofficial institution. All the other points raised by my hon. and gallant Friend were dealt with in the full reply which I gave on this subject on 10th March.

Sir H. Croft: Is it competent for a foreign country to make suggestions which affect the Sovereignty of this country and to put such suggestions forward for debate before this committee?

Mr. Eden: No, Sir. I am not aware that a foreign country put forward these questions for debate, nor am I aware that the matter is on the agenda. This is, I understand, an entirely unofficial institution, and its words, whatever they may have been, have no authority internationally at all.

Sir H. Croft: Is it not also a fact that the suggestions have come from one of the Opposition parties in this country; and is that privilege to be extended to other important organisations in this country which have no connection with the Government?

Mr. Eden: I do not know what the hon. Gentleman means by "suggestions from the Opposition parties." I can speak only for the Government.

Mr. Thorne: asked the Secretary of State for Foreign Affairs whether a report will be printed of the Raw Materials Committee that met at Geneva; and whether he can say when the sub-committees will report to the full Council?

Mr. Eden: The committee has issued an interim report, copies of which I am arranging to place in the Library of the House. It will be seen from this interim report that the sub-committees will meet in June and that their meeting will be followed by a plenary meeting of the committee. The reports of the subcommittees will be considered at that meeting.

ABYSSINIA.

Mr. A. Henderson: asked the Secretary of State for Foreign Affairs whether he is in a position to make a statement on the note sent by the Emperor of Ethiopia to the League of Nations asking for League investigators to be sent to Addis Ababa to report on the recent massacres; and whether His Majesty's Government will support such a request?

Mr. Eden: The note mentioned by the hon. Member has been circulated by the Secretary-General of the League of Nations to all members of the League. In view of the fact that it may possibly form the subject of consideration in due course by the Council or the Assembly, I am not in a position to make any statement on the matter at present.

Mr. Henderson: Will the right hon. Gentleman bear in mind that there is a

precedent, namely, the dispatch of the Lytton Commission to Manchuria in 1933?

TREATY OF LOCARNO.

Mr. Day: asked the Secretary of State for Foreign Affairs whether, in view of the fact that the terms of the Treaty of Locarno set out certain specific general disarmament principles of the signatories to same, the Government will consider the advisability of discontinuing this treaty in its present form on its expiration?

Mr. Eden: It is not possible at this stage to make any statement on this subject.

Mr. Day: Have the Government considered this point?

AUSTRIA

Captain Plugge: asked the Secretary of State for Foreign Affairs whether, in view of the policy of His Majesty's Government to support national self-determination and of the fact that the strengthening of Austria's independence is of paramount importance to the peace of Europe, he is in a position to state the attitude of His Majesty's Government towards the proposed restoration of the Hapsburg dynasty?

Mr. Eden: I do not think it would be desirable for His Majesty's Government to state their attitude to this hypothetical contingency in present circumstances.

Captain Plugge: Have the Austrian Government ever asked the British Foreign Office its attitude on the subject?

Mr. Eden: My impression is that they have not.

Mr. Garro Jones: If we have a right of intervention in that country, would it not be well to put forward a British candidate for the Throne?

YUGOSLAVIA (MACEDONIA).

Mr. Riley: asked the Secretary of State for Foreign Affairs whether, in view of the better relations created by the treaty of January, 1937, between Yugoslavia and Bulgaria, His Majesty's


Minister in Belgrade will make representations in favour of an amnesty for political prisoners in the Macedonian regions of Yugoslavia?

Mr. Eden: I do not think that this is a matter in which His Majesty's Government could intervene in the sense suggested.

Mr. Riley: Has the right hon. Gentleman any information as to whether the Yugoslav Government have such a mandate under consideration?

Mr. Eden: I have no information as to the need or the possibility of such a mandate.

ROYAL DOCKYARDS (ESTABLISHED POSTS).

Captain Plugge: asked the First Lord of the Admiralty whether he can make any statement with regard to the progress of the negotiations for the increase of established posts in His Majesty's dockyards; and by what date it is anticipated that a decision will be announced?

Mr. Lindsay: I presume that my hon. and gallant Friend refers to those departments of the dockyards and other Admiralty industrial establishments not covered by the recent agreement. The question of fixing an established complement of industrial posts in these departments is now before the Admiralty Industrial Council, and I hope that a settlement will be reached before long.

CYPRUS.

Mr. Pritt: asked the Secretary of State for the Colonies what action His Majesty's Government, or the Government of Cyprus, proposes to take to deal with the problem of rural indebtedness?

The Secretary of State for the Colonies (Mr. Ormsby-Gore): It is hoped shortly to institute new measures to deal with the problem of long-term rural indebtedness. Negotiations for the reorganisation of the Agricultural Bank in Cyprus are now in an advanced stage, but pending their completion it is not possible for me to make a more detailed statement.

Mr. Pritt: asked the Secretary of State for the Colonies whether it is the

intention of His Majesty's Government to restore the constitutional position of Cyprus; and, if so, whether the opportunity will be taken to grant a more liberal constitution than that against which the people of Cyprus rose in revolt in 1931?

Mr. Ormsby-Gore: No alteration in the constitution of the Central Government is under consideration. It seems clear that, having regard to local conditions, the sound line of advance lies in first and foremost encouraging the Islanders in the management of their local affairs in the districts. It is, therefore, the definite policy of the Government to enlarge the sphere of the local authorities: and the powers of the municipalities and village authorities are accordingly being extended.

Mr. Pritt: From the point of view of the Central Government of the Island, does not that advance amount to standing still?

Mr. Ormsby-Gore: I have come to the conclusion that it would be undesirable to alter the present constitution of the Central Government of Cyprus.

Mr. Pritt: Is there any hope of matters getting any better in the absence of a Legislative Assembly?

Mr. Ormsby-Gore: Oh, yes, Sir.

Oral Answers to Questions — PALESTINE.

SITUATION.

Lieut.-Commander Fletcher: asked the Secretary of State for the Colonies whether he will make a statement concerning the position in Palestine?

Mr. Ormsby-Gore: On the general position I would invite the hon. and gallant Member's attention to the last part of the reply which I gave to questions in the House on 17th March. The security situation in the Southern district is reported to be not abnormal. A large number of arrests have been made in the Northern district, and a number of preventive arrests are being made in Jerusalem. The High Commissioner, who arrived back in Palestine last Friday, was touring the disturbed district of Galilee on Monday, and I expect to receive a further report from him very shortly.

RESTORATION OF ORDER (APPEAL).

Mr. T. Williams: asked the Secretary of State for the Colonies whether, apart from the Government communiqué issued in Palestine by the Officer Administering the Government, on 10th February, which records a conversation between the High Commissioner and the Mufti of Jerusalem and two other members of the Arab supreme committee, the Mufti or any other member of the Arab supreme committee has publicly condemned the recent murders and crimes of violence which are taking place in Palestine?

Mr. Ormsby-Gore: I have been informed that the Arab Higher Committee have recently issued a statement containing an appeal to avoid acts of violence.

Mr. Williams: Have there been any further crimes of violence or murders since the publication of this appeal?

Mr. Ormsby-Gore: I am afraid so.

Mr. Crossley: Has my right hon. Friend any reason to suppose that the Arab Higher Committee do not wholly disapprove of the murders that are now being committed?

Mr. Ormsby-Gore: As I said in the House last week, I understand that the Higher Committee have expressed disapproval of the outrages.

Captain Strickland: asked the Secretary of State for the Colonies whether, seeing that the Government of Palestine recently requested both the Arab Supreme Council and the Jewish General Council to publish an appeal for the restoration of order in Palestine, he will say what was the response from these two bodies, respectively?

Mr. Ormsby-Gore: I have no information as to any recent request by the Government of Palestine to the Arab Supreme Council and the Jewish General Council to publish an appeal for the restoration of order. I understand, however, that the Arab Higher Committee have, during the last few days, issued a statement which includes an appeal to avoid acts of violence.

Captain Strickland: Is the right hon. Gentleman aware that the Jewish Council issued such an appeal several weeks ago?

Mr. Ormsby-Gore: Yes, Sir.

CARRYING OF ARMS.

Commander Locker - Lampson: asked the Secretary of State for the Colonies how many Bedouins in Palestine have the right to carry arms and what Jews have similar rights?

Mr. Ormsby-Gore: I will ask the High Commissioner for Palestine if he can supply the information desired by my hon. and gallant Friend.

Mr. Thorne: What does the right hon. Gentleman think of the idea of establishing a citizen army?

EAST AFRICA.

Mr. Mathers: asked the Secretary of State for the Colonies whether any steps have been taken as to the result of the recommendation of the Conference on the Co-ordination of General Medical Research in East Africa that research into the social and economic development of the African should be undertaken by the Medical Research Council?

Mr. Ormsby-Gore: I assume that the hon. Member is referring to the report of the Conference held in January, 1936. The recommendation of that Conference was not that research be undertaken by the Medical Research Council, but that, in order to help if it was decided to make an application for funds, a body of experts should visit East Africa. The report was examined by the Tropical Medical Research Committee of the Medical Research Council and by the Colonial Advisory Medical Committee, who advise me that they doubt whether any useful purpose would be served by such a visit, and that further assistance could best be rendered by the visit of individual experts to study special problems as they arise. I regret that at the present time there are no funds available from which such a scheme of further research could be financed, and I observe from the report of the Conference that the minimum sum required for their scheme was stated to be at least £30,000 or £40,000 a year.

COLONIES (SOUND FILMS).

Mr. Day: asked the Secretary of State for the Colonies whether it is still the policy of the Government of Uganda to prohibit the exhibition to Europeans


of sound films, that the authorities consider are not suitable for non-Europeans; and whether this policy has been adopted by any other Colonial authorities?

Mr. Ormsby-Gore: The Government of Uganda does not discriminate between films for exhibition to Europeans and to non-Europeans. There is power to discriminate in Kenya, Fiji, Northern Rhodesia and Nyasaland.

INTERNATIONAL SUGAR CONFERENCE.

Mr. Jagger: asked the Secretary of State for the Colonies whether he has now received the memorandum of the Jamaica Legislative Council drawing attention to the unemployment which would be created in that colony if colonial sugar production is to be curtailed under any agreement reached at the International Sugar Conference; whether, in view of this, he will reconsider his decision that such curtailment is desirable; and whether he will take steps to obtain information from the sugar producing colonies as to the amount of unemployment which will be caused in each if sugar production is stabilised at its present level and the output per acre continues to increase?

Mr. Ormsby-Gore: I have not yet received the memorandum referred to, and without knowing its precise terms it is difficult for me to reply to the second part of the question. I would, however, inform the hon. Member that no decision has been taken to curtail Colonial output but only to consider regulation of its expansion if that is necessary to secure an otherwise satisfactory International Agreement which, as indicated in reply to the hon. and gallant Member for Accrington (Major Procter) on 17th March, I and my advisers believe would be on balance more beneficial to Colonial producers than unregulated production. As to the last part of the question, I have not received any representations to the effect that the stabilisation of present output would lead to a diminution of employment, but I will make inquiries from Colonial Governments.

Mr. Jagger: Has the right hon. Gentleman yet had any consultation with the authorities at Jamaica in connection with the matter?

Mr. Ormsby-Gore: I think I have received some views from the Jamaica Government and a representative of the Jamaica sugar trade interest attended my Advisory Committee. All the Governors of the sugar-producing Colonies have been informed up to date of the preparatory discussions before the Conference.

Mr. Macquisten: asked the Secretary of State for the Colonies whether he has considered any scheme whereby the British Empire could become self-supporting as regards sugar through increased output in the tropical Colonies; and whether he will arrange for its discussion at the forthcoming Sugar Conference?

Mr. Ormsby-Gore: No such scheme has been put before me, and it would hardly be appropriate to discuss it at an International Conference.

Mr. Sandys: asked the Secretary of State for the Colonies whether his attention has been drawn to the fact that at a recent meeting of the Jamaica Imperial Association attention was called to the fact that the present deficit of the colony amounted to over £30,000, and a resolution passed urging the Government and the Legislative Council to have regard to the need for further expansion of sugar production in Jamaica owing to the reduction of the banana crops through Panama disease; and whether, in these circumstances, he can give an assurance that no decision will be agreed to by the British delegation to the forthcoming Sugar Conference which would prevent the reasonable further expansion of British colonial sugar production?

Mr. Ormsby-Gore: The resolution referred to has not been brought to my notice. As to the latter part of the question, I would refer to the answer given to the hon. and gallant Member for Accrington (Major Procter) on 17th March.

Mr. Graham White: asked the Secretary of State for the Colonies whether he has now received the resolution passed by the Legislative Council of Jamaica indicating that the restriction of Jamaican sugar production under any agreement reached at the International Sugar Conference would cause increased unemployment in that island; and to what extent the Legislative Council of Jamaica has


been taken into consultation in the preparation of the British policy to be put forward at this conference?

Mr. Ormsby-Gore: As to the first part of the question, I would refer to the answer I have given to-day to the hon. Member for Clayton (Mr. Jagger). As to the second part, the Government of Jamaica have been kept informed of the progress of preliminary discussions, but the Legislative Council has not been specifically consulted by His Majesty's Government.

Mr. Sandys: asked the Lord President of the Council whether, in view of the fact that the British Empire as a whole is still an importer of sugar, whereas many other countries participating in the forthcoming International Sugar Conference are exporters of sugar, he can give an assurance that nothing will be agreed to by the British delegation to this conference which will prevent the British Empire from becoming self-supporting in sugar at the earliest possible opportunity?

Mr. R. MacDonald: His Majesty's Government have not adopted a policy aiming at complete self-sufficiency as regards sugar on the part of the British Empire as a whole, and are therefore unable to give any such assurance as is suggested.

Mr. White: asked the Lord President of the Council whether, in view of the fact that only countries representing 90 per cent. of world sugar production have been invited to the International Sugar Conference and that not all these have accepted, he will give an assurance that the British delegation will agree to no limitation on output or exports that will give to those countries not participating an unfair advantage over our own sugar-producing Colonies?

Mr. MacDonald: His Majesty's Government would not enter into an agreement which in their opinion gave either to countries participating in it or to countries outside it an unfair advantage over any British territory. Those countries not invited to the conference are those whose production of sugar is comparatively small. Actually their combined exports amount to less than 1 per cent. of total world exports.

Oral Answers to Questions — DEFENCE.

OIL RESERVES.

Mr. Dobbie: asked the Minister for the Co-ordination of Defence, whether the arrangements made by the Government for the storage of adequate reserves of mineral oil for a national emergency mean that the additional tankage necessary will be provided by the State, or is it intended to guarantee or subsidise the provision of additional tankage by private enterprise?

The Minister for the Co-ordination of Defence (Sir Thomas Inskip): In the answer which I gave to the hon. Member on 17th March, I said that arrangements are being made for the storage of adequate reserves of oil. It is not possible for me to give details of the arrangements.

AIR RAID PRECAUTIONS.

Sir Thomas Cook: asked the Minister for the Co-ordination of Defence whether members of the St. John's Ambulance Brigade and tire brigades who are included in schemes of air-raid precautions will be exempt from active service in the event of mobilisation?

Sir T. Inskip: It is not possible to give an assurance to my hon. Friend that all members of St. John's Ambulance Brigade and fire brigades included in schemes of air raid precautions will be exempt from active service in the event of mobilisation. The requirements of the Air Raid Precautions organisation are, however, receiving the closest consideration with a view to guidance being given to local authorities and others as to the classes of persons considered suitable for enrolment in the different forms of public service.

FOOD SUPPLIES.

Colonel Sir Edward Ruggles-Brise: asked the Minister for the Co-ordination of Defence the policy of His Majesty's Government in regard to the proportion of food supplies to be obtained from home and overseas sources, respectively, in time of war?

Sir T. Inskip: I would refer my hon. and gallant Friend to the reply which I gave to my hon. Friend the Member for Stone (Sir J. Lamb) on 18th February, to which I have nothing to add.

MOTORR FUEL

Captain Gunston: asked the Minister for the Co-ordination of Defence whether, in view of the importance in the interests of defence of encouraging the widest possible use of home-produced fuels for motor transport, it is proposed to take any action to encourage developments designed to secure the use of fuels such as compressed gas or producer gas as alternatives to imported oil?

Sir T. Inskip: It is the policy of the Government to encourage the use in this country of home-produced fuels and several steps have been taken to this end. In the case of vehicles using compressed gas and producer gas, there is no duty payable on the fuel, and for the heavier types of vehicles there is a further advantage that the rate of vehicle duty is lower than for vehicles using petrol or diesel oil. The question whether any further action might be taken which would enable a wider use to be made of such vehicles during an emergency is at present under examination.

NIGERIA.

Mr. Mathers: asked the Secretary of State for the Colonies whether he has considered the representations which have been submitted regarding the division of Ijebu province, Nigeria, into two; whether he is aware of the objection to this proposal on the part of the majority of the people; and whether he intends to withhold his consent to the proposed change?

Mr. Ormsby-Gore: I have not received any information on this matter, but I will cause inquiries to be made.

Mr. Mathers: asked the Secretary of State for the Colonies whether he has considered the grievances of the Nigerian Motor Transport Union, whose members have had double licence fees imposed upon them; whether he is prepared to reduce the fees to single rate on account of the undertaking regarding conveyance charges given by the union; and whether he will accede to the request of the union for representation on the transport advisory board?

Mr. Ormsby-Gore: I have not, as yet, received any statement of the grievances of the Nigerian Motor Transport Union.

Such a statement would fall to be investigated in the first instance by the Governor of Nigeria, from whom I am expecting a report, and any recommendations which he may see fit to make I shall, of course, carefully consider.

Oral Answers to Questions — AVIATION.

INTERNAL SERVICES.

Mr. Lyons: asked the Under-Secretary of State for Air whether, in view of the cessation of certain air lines at established airports, he can indicate whether any steps are proposed to promote internal services and to encourage commercial air traffic in this country?

The Under-Secretary of State for Air (Sir Philip Sassoon): As my hon. and learned Friend is aware, the task of considering and reporting upon steps which might be adopted for assisting in the promotion of civil aviation in this country was entrusted to the Maybury Committee. As recently announced to the House, the recommendations made by the Committee with that object in view have been accepted in principle by His Majesty's Government, and so far as the Air Ministry is concerned the approved measures will be given effect to as speedily as possible.

Mr. Lyons: Will a decision soon be reached?

Sir P. Sassoon: The recommendations of the Maybury Committee have been accepted in principle.

AIRPORTS AND AERODROMES.

Mr. Lyons: asked the Under-Secretary of State for Air what arrangements have been made by Imperial Airways for an airport at Lullingstone, Kent?

Sir P. Sassoon: I understand that while nothing in the nature of a definite arrangement has been made, Imperial Airways contemplate the possibility of operating their European services from Lullingstone, Kent, if an airport is established there by the Southern Railway.

Mr. Everard: asked the Under-Secretary of State for Air what steps are being taken to carry out the recommendation of the Maybury Committee that a civil aerodrome shall be established on the north of the London area?

Sir P. Sassoon: The Maybury Committee made no recommendation for the establishment of a State aerodrome in the north of London, nor has any such decision been taken. I hope that this is a matter in which the local authorities will concern themselves in accordance with paragraph 146 of the Maybury Report, and I need hardly say that the Air Ministry will be glad to furnish all possible advice.

Mr. Everard: Does not the right hon. Baronet think it very necessary that we should have a public airport in North London in view of the experimental service suggested by the Maybury Committee for the North of England?

Sir P. Sassoon: Yes, I think it is very important, and I hope that the local authorities concerned will think so, too.

Mr. Lyons: Has any decision yet been arrived at with reference to a central airport?

Sir P. Sassoon: The question deals with North London.

Mr. Kelly: asked the Under-Secretary of State for Air whether negotiations have been completed for the acquisition by the Slough Council for 190 acres of the Parlaunt Farm, Langley, for the purposes of an aerodrome; and what has been the price agreed upon or paid for this land?

Sir P. Sassoon: As regards the first part of the question, I would refer the hon. Member to the reply which I gave last week to the hon. Member for Spring-burn (Mr. Hardie), and to which there is at present nothing to add. As regards the second part, if the compulsory purchase order is confirmed, the price, if not then agreed, will fall to be fixed by arbitration after that event.

Mr. Kelly: asked the Under-Secretary of State for Air what steps the Blackpool Corporation has taken to acquire land in or near the Clifton estate at Lytham for the purposes of its airport; what is the area of such land; and what price has been agreed upon or has been paid for it?

Sir P. Sassoon: The only information I am able to give on this matter is that, at the request of the Blackpool Corporation, the Air Ministry have inspected an area of about 350 acres at Lytham and

have made a technical report to the corporation regarding its possible development as an aerodrome.

Mr. Kelly: Is there anything stated in that report with regard to the price?

Sir P. Sassoon: No, Sir.

Mr. Kelly: asked the Under-Secretary of State for Air what has been the result of the hearing begun at York on 9th February in connection with the claim for £43,626 by University College, Oxford, owners of the Linton-on-Ouse estate, portions of which the Air Ministry have compulsorily acquired for the new aerodrome being constructed as part of the scheme of air defence for the North; what is the area of land being acquired from University College; and what price is being paid for the 409 acres already taken by the Ministry from four different holdings?

Sir P. Sassoon: As regards the first part of the question, the award of the arbitrator has not yet been received, and as regards the second part the area being acquired is approximately 417 acres. As regards the last part, there must, I think, be some misunderstanding; one of the notices to treat was in respect of 409 acres, but that area is included in the 417 acres for which the price is being settled by arbitration.

RADIO FACILITIES.

Mr. Everard: asked the Under-Secretary of State for Air at which civil aerodromes wireless will be installed in accordance with the Maybury Committee's Report?

Sir P. Sassoon: A scheme to give effect to the recommendation of the Maybury Committee respecting the provision of radio facilities is being worked out, but the technical and other factors involved call for very careful examination, and I am sorry that it is not yet possible to give such definite information as that for which my hon. Friend asks.

Mr. Everard: Can the right hon. Baronet say when he will be able to give it?

Sir P. Sassoon: I do not think I could.

AERONAUTICAL MAPS.

Mr. Everard: asked the Under-Secretary of State for Air what steps are


being taken to come to an international agreement on a uniform system of flying maps?

Sir P. Sassoon: My hon. Friend will be aware, I think, that Annex F of the Air Navigation Convention of 1919 provided for a uniform system of aeronautical maps. The Annex has been revised from time to time and there has been in consequence, I am afraid, some delay on the part of the contracting States in general in issuing the necessary maps. Arrangements have been made with the Ordnance Survey, Southampton, for the publication of those for which this country is responsible.

Mr. Everard: Will the right hon. Baronet take it up as the next meeting?

Sir P. Sassoon: I hope it will not be necessary to do so and that our own maps may be published before then.

Oral Answers to Questions — ROYAL AIR FORCE.

TERN HILL STATION (FIRE).

Captain Heilgers: asked the Under-Secretary of State for Air whether he is aware that junior officers who lost all their kit and belongings in the fire at Tern Hill Air Force Station, on 7th October, 1936, are still awaiting information as to their claims for loss and have received no compensation beyond the temporary advances made immediately after the fire; and will he therefore take steps to expedite the payment of compensation?

Sir P. Sassoon: My hon. and gallant Friend will be aware from the correspondence which he has had with the Air Ministry that the claims for compensation to which he refers have been under active consideration, and I can assure him that everything is being done to expedite a decision. He will appreciate that detailed examination of the claims is necessary, and the advances to which he refers were specially made in order to prevent hardship. The case as a whole is not without its complications, but I hope that a decision will be reached very shortly.

Captain Heilgers: In view of the hardships that these young officers have suffered, will the right hon. Baronet

consider instituting a standardised system of insurance to cover all service risks?

Sir P. Sassoon: Yes, I will consider that.

NEW FACTORY, LOSTOCK, BOLTON.

Mr. Rowson (for Mr. Parkinson): asked the Under-Secretary of State for Air how many persons are employed on the work of building the new aircraft factory at Lostock, Bolton; and whether the workers are being recruited from Employment Exchanges outside the Bolton area where unemployment is heavy?

Sir P. Sassoon: The number of persons at present employed on the site is 96, and these consist almost entirely of employés of the Bolton Corporation and of two Bolton contractors. As regards any future recruitment, I understand that, so far as vacancies are notified to the local Employment Exchange by contractors and suitably qualified men are not available locally, consideration will be given to men possessing the necessary qualifications who are registered at Exchanges in other districts.

Mr. Rhys Davies: Would the right hon. Gentleman be good enough to suggest to these contractors that they should take note of the exchanges where unemployment is heaviest?

Sir P. Sassoon: That is a matter for the exchanges concerned.

Oral Answers to Questions — TRANSPORT.

MOTOR-LORRIES (REGULATIONS).

Mr. W. H. Green: asked the Minister of Transport whether he has yet circulated a draft order, as promised, making effective regulations which were proposed in 1931 for the provision of guard-rails between the front and rear wheels of motor-lorries; has his attention been called to a fatal accident to a child at Watergate Street, Deptford, caused by falling between the front and rear wheels of a motor-lorry due to the absence of such guards; and what action does he propose to take to make effective the regulation referred to?

Mr. Hore-Belisha: Yes, Sir, and I have recently sought advice from the Transport Advisory Council on this matter.

Mr. Green: Can the Minister say whether the order has actually been made; and does he think that nine months is a sufficient time in which to make the order effective, particularly in view of the increasing number of lives that are being lost as the result of it being ineffective?

Mr. Hore-Belisha: I am not aware of an increasing number of lives being lost. It was my desire to consult the interests who are most affected which was responsible for my referring the matter to the Transport Advisory Council.

Mr. Green: Is the right hon. Gentleman aware that he made this promise as long ago as last June as a result of a fatal accident in this borough?

Mr. Hore-Belisha: I have carried out my promise. I made draft regulations and I circulated them to the interests affected for their comments. I have now transferred the matter to the Transport Advisory Council in order that they may examine these comments and give advice.

Mr. Green: Is it not a fact that this order has not been made effective because the motor interests have objected on the ground of expense?

OMNIBUS SERVICES (SCOTLAND).

Mr. Hardie: asked the Minister of Transport whether, in view of the inconvenience to travelling public caused by the wages dispute between the S. M. T. and their employés, the Government will consider the nationalisation of road services in Scotland and ensure adequate facilities for the public and fair wages for the employés?

Mr. Hore-Belisha: No, Sir.

Mr. Hardie: Does not the right hon. Gentleman think that the wages paid by the Glasgow Corporation is the cause of the trouble, and that it would be in the interests of Scotland to nationalise the road services as well as the roads in order to give justice to these employés?

ROAD ACCIDENTS.

Mr. J. J. Davidson: asked the Minister of Transport the total number of road accidents, fatal or otherwise, in the Maryhill Division of Glasgow for the years 1935 and 1936, respectively?

Mr. Hore-Belisha: As a result of road accidents in the Maryhill Police Division of Glasgow in 1936, 10 persons were killed and 377 injured. The comparative figures for 1935 were seven killed and 369 injured.

Mr. Davidson: In view of the increased motor transport in this congested constituency, will the right hon. Gentleman enter into consultation with the local authority with a view at least of avoiding some of the accidents?

Mr. Hore-Belisha: I am in constant touch with the local authority, and I can only hope that the hon. Gentleman will assist me to persuade them to do everything that is necesary at all times.

Mr. Charles Williams: Are the Glasgow authorities as backward in this as they are in housing?

Mr. Wilson: asked the Minister of Transport whether his Traffic Advisory Council has considered the question of sending to local authorities a questionnaire concerning the various practices of motorists which may involve road accidents similar to that already despatched concerning cyclists?

Mr. Hore-Belisha: The Transport Advisory Council have had no such reference.

TRAFFIC CONTROL (GLASGOW).

Mr. Davidson: asked the Minister of Transport the total number of occasions on which police officers have had to take over traffic control duties at the George IV Bridge, Glasgow, in place of the traffic lights, since 1935?

Mr. Hore-Belisha: Seventy-three.

JUSTICES OF THE PEACE (RETFORD).

Mr. Bellenger: asked the Attorney-General how many of the Retford Borough magistrates are over 70 and 80 years of age, respectively?

The Solicitor-General (Sir Terence O'Connor): One is over 70 and three are over 80.

Mr. Bellenger: Does not the hon. and learned Gentleman think that in view of the nature of this reply, some steps ought to be taken to get a revision of this bench of magistrates?

The Solicitor-General: The matter is one upon which the Lord Chancellor's Advisory Committee could communicate with my Noble Friend, if they thought the bench needed strengthening, and that is the proper course.

Mr. T. Williams: Is there any truth in the statement that all these magistrates are members of the Junior Imperial League?

SHARE PUSHING (COMMITTEE OF INQUIRY).

Mr. T. Johnston: asked the Attorney-General whether, in view of the recent revelations at the Central Criminal Court in a share pushing case, he will draw the attention of Sir Archibald Bodkin's committee of inquiry into share pushing to the free services and advices now being offered to potential investors by a firm called H. Edward Williams and Company through the medium of a publication described as the "Financial and Commercial Record"?

The Solicitor-General: The methods to which the hon. Member calls attention have already been brought to the notice of the committee of inquiry into share pushing.

Mr. Johnston: In this particular case?

The Solicitor-General: I would rather not give an answer as to any particular case. The methods have been brought to the notice of the Committee, and I can assure the right hon. Gentleman that the particular case has not escaped attention.

COASTAL TRADE (FOREIGN VESSELS).

Mr. Johnston: asked the President of the Board of Trade whether he is aware that during recent months the foreign - owned vessels "Reiger," "Cornelia," "Grada," "Senang," and "Setas" have been loaded at Bo'ness with scrap-iron and other munitions materials for another British coastal destination; whether the profits on these voyages will be subjected to British Income Tax; and whether he will give the names of the iron and steel founders who chartered the vessels?

The Parliamentary Secretary to the Board of Trade (Dr. Burgin): The official records of shipping at Bo'ness show that since 1st January, 1936, none of the vessels mentioned in the question loaded cargo in the coastwise trade at Bo'ness. Two of them carried no cargo coastwise to or from Bo'ness and the remaining three made, in all, four coastwise voyages to that port with cargo, on each occasion departing in ballast. As regards the second part of the question, I would refer the right hon. Gentleman to the answer given to his question of the 2nd March. I fear I cannot give information regarding the charterers of the vessels for these voyages.

Mr. Johnston: Can the hon. Gentleman give any reason why we cannot have the names of the charterers who get special financial facilities in their own businesses from this House and then deliberately choose foreign vessels?

Mr. Gallacher: Is it not the case that Colville and Company, Limited, are associated with this matter?

Mr. Johnston: May I have an answer to my question? Why cannot we have the names given in this House of the patriotic charterers who deliberately choose foreign vessels to carry munitions?

Dr. Burgin: It is contrary to the practice to divulge particulars of the individual trader's certificate, which is supplied to the Customs for official purposes?

CANADIAN GOODS (IMPORTS).

Mr. Granville Gibson: asked the President of the Board of Trade whether he is aware that Article 12 of the trade agreement between His Majesty's Government and the Government of Canada, dated 23rd February, 1937, provides that if goods are dumped either in the United Kingdom by Canada or in Canada by the United Kingdom each Government agrees not to impose any special dumping duties on the goods of the other country; and whether, as experience has shown that the dumping of goods is usually done from Canada into this country and not from this country into Canada, more effective steps to prevent dumping in this country of Canadian goods will be devised?

Captain Euan Wallace (Secretary, Overseas Trade Department): Article 12 of the United Kingdom-Canadian Agreement of 23rd February, 1937, provides for action by His Majesty's Government in Canada in cases where it can be shown that Canadian goods are being dumped in the United Kingdom market. These provisions have for their object the restoration of fair trading conditions in cases of the kind referred to by my hon. Friend in the second part of his question, and I have no reason to suppose that they will not be effective.

Mr. Lyons: Can my right hon. and gallant Friend tell me whether the action to which he referred will be action through the machinery of the Canadian Tariff Board?

Captain Wallace: I think that my hon. and learned Friend would do well to refer to the Budget speech of the Minister of Finance in Canada, and he will see that His Majesty's Government in Canada are determined to see that fair trading conditions are observed.

Mr. Lyons: I asked only about the machinery.

Mr. Gibson: Does not my right hon. and gallant Friend think that a less dilatory manner of settling these difficulties would be to pass legislation restricting the dumping of manufactured goods into this country below the selling price in the country of origin?

Captain Wallace: I think it would be a great mistake for us to throw any doubt on the intentions of the Canadian Government to put this matter right, when it is only a month since the Treaty was signed.

WAR RISKS (INSURANCE).

Mr. White: asked the President of the Board of Trade whether His Majesty's Government have given any consideration to the question of insurance of war risks on land in the United Kingdom; and whether he can make a statement on this matter?

Dr. Burgin: I cannot at present add to the answers given on 3rd February and 2nd March to the hon. Member for Attercliffe (Mr. C. Wilson).

TERRITORIAL ARMY ASSOCIATION (LONDON).

Mr. Grant-Ferris: asked the Secretary of State for War the number and names of local authorities in the Greater London area who have refused to elect a representative on their Territorial Army Association dealing with anti-aircraft work; and what is the reason for such refusal?

The Financial Secretary to the War Office (Sir Victor Warrender): Under the Territorial and Reserve Forces Act, 1907, the local civil authorities which may have representation on Territorial Army Associations are county councils, county borough councils and universities. The local authorities in the Greater London area which have refused to nominate representatives for appointment to associations are the East and West Ham borough councils.

ARMAMENTS CONTRACT (RANSOMES AND RAPIER, LIMITED).

Mr. Dingle Foot: asked the Secretary of State for War the reasons why the War Office rejected the offer of Ransomes and Rapier, Limited, to manufacture shells on a no-profit basis; whether, at the time when it was first rejected, the tender of the firm was the lowest received; and, if not, if he will state the difference between the said tender and the lowest tender received?

Sir V. Warrender: The firm in question offered to make empty shell, if the Government would provide certain building and plant, on the basis that they should be indemnified against loss but make no profit, though their full oncosts should be allowed for. The figure quoted by them, however, was not the lowest tender that had been received at the time, and was, in any case, only an estimate of the cost which the Department would have to pay if the firm was to be guaranteed against loss. As the firm had expressed strong disinclination to make munitions of war at all, it was, in all the circumstances, decided not to press them to do so. As regards the last part of the question, it is not the practice of Government Departments to disclose information of this nature.

Mr. Foot: Can the hon. Member say at what, date the lowest tenders to which he refers were received?

Sir V. Warrender: The hon. Member has asked me whether at the time the tender of this firm was received, it was the lowest. I have told him that it was not the lowest at the time.

Mr. Paling: Can the Minister expect the War Office to agree to a no-profit basis in any event?

Mr. Garro Jones: Can the hon. Member say whether any tenders were received which were of the same kind, and can he say on what grounds he refuses to give information regarding the prices, when the prices paid are known throughout the trade?

Sir V. Warrender: In reply to the second part of the question, it has never been the practice to disclose such information. In reply to the first part of the supplementary question, I have said that the price quoted by this firm was not the lowest that was offered to us at the time.

Mr. Lyons: asked the Secretary of State for War what contracts for defence material have been refused to the firm of Messrs. Ransomes and Rapier, Limited, of Ipswich and London, on account of their proposals for a non-profit basis?

Sir V. Warrender: None, Sir. The offer of Messrs. Ransomes and Rapier was refused for several reasons, but the desire expressed by this firm to work without profit was, of course, a factor in favour of acceptance.

Mr. Lyons: Can the hon. Member give me the date?

Mr. Radford: Is it not a fact that these people did not tender any price, but gave a provisional figure and that they would have been indemnified against loss if it cost them more than they calculated?

MILK MARKETING SCHEME.

Mr. Sutcliffe: asked the Minister of Agriculture whether he is aware that, in order to relieve the producer retailer, other producers have agreed to an amendment to the Milk Marketing Scheme, fixing the contribution of the former at 1½d. per gallon; and whether he can state when the Government's sanction will be given to this amendment?

The Minister of Pensions (Mr. Ramsbotham): Objections were made to the

draft amendment of the Milk Marketing Scheme to which my hon. Friend refers, and these objections, with others, were recently the subject of a public inquiry. My right hon. Friend has not yet received the report of the Commissioner who held the inquiry, and he is unable to state at present when the amendment, if approved, is likely to become effective.

Oral Answers to Questions — INDIA.

THE LATE LIEUTENANT BEATTY.

Sir A. Knox: asked the Under-Secretary of State for India who was responsible for sending out Lieutenant Beatty on 7th February with a large sum of money and without adequate escort?

The Under-Secretary of State for India (Mr. Butler): Lieutenant Beatty was proceeding, in the course of his duties as Assistant Political Officer, to pay the khassadars in the Datta Khel and Razmak areas. He was accompanied by four khassadars in his car and two in the lorry behind. Under the system of tribal responsibility, the protection of the roads is part of the responsibility of the khassadars, or tribal police. Travellers are accompanied, when necessary, by an escort of one or more of these tribesmen, and this is the normally effective form of protection, because an attack on the escort or persons so escorted is a violation of tribal custom. On the other hand, a military escort has not this advantage, and its employment in certain circumstances might provoke an attack. The commission of an outrage of such a character on the road is, of course, an exceedingly grave event. The Government are determined to take all necessary measures for the restoration of order and the protection of its servants and the public.

Sir A. Knox: Has it not been proved that the presence of these Khassadars is quite insufficient as an escort when £2,000 is carried by an officer, and would it not be better in the future to have an armoured car in front in order to give some measure of protection to the officer?

Mr. Butler: A great deal of money is paid to the Khassadars in exactly the same manner as on this occasion. My Noble Friend sees no reason to suppose that this is not the normal method on such an occasion, much as he may regret what occurred.

Sir A. Knox: Although it may be the normal method, has it not been proved that it was insufficient protection for this young officer?

Mr. Butler: It is not insufficient protection on a normal occasion.

LLOYD DAM.

Mr. Thorne: asked the Under-Secretary of State for India, when the Lloyd Dam, in the Nira Valley, will be completed; what is the estimated cost; what is the length and width of the dam; and will he give any other information in his possession in connection with the reservoir?

Mr. Butler: The Nira Valley Irrigation Project is now nearing completion. The Lloyd Dam, which is its main feature, was completed in 1928, at a cost of Rs.127 lakhs, or £952,500; it is just over a mile long and is 124 feet wide at its base. The dam conserves one of the largest reservoirs in the world which, when filled to its maximum, stretches for 17 miles, is 142 feet deep in places, and has a capacity of 24,200 million cubic feet. I am sending the hon. Member a note containing further information.

SCHOOL HOME-WORK.

Mr. Lees-Smith: asked the President of the Board of Education when it is proposed to publish the report on home-work set in schools?

The Parliamentary Secretary to the Board of Education (Mr. Shakespeare): The report is now in the hands of the printers, but I do not anticipate that it will be published before the end of May.

Oral Answers to Questions — SCOTLAND.

JURORS (FEES).

Mr. Pethick-Lawrence: asked the Lord Advocate whether the reforms in Scots law which he advocated in Edinburgh on 19th March would include adequate recompense to jurors for lost time?

The Lord Advocate (Mr. T. M. Cooper): No, Sir.

Mr. Pethick-Lawrence: Can the Lord Advocate not realise the very great hardship that is inflicted upon jurymen who

have to give up their employment and go to the court for a criminal trial, and is he not prepared to consider the importance of dealing with such cases?

The Lord Advocate: Service as a juryman has always been regarded as part of the duty of a citizen, and I do not suppose that there is any demand for the change which the hon. Member suggests.

Mr. Pethick-Lawrence: Has the Lord Advocate inquired of the men who have suffered these great losses of their weekly salaries and wages?

Mr. Macquisten: Is it not the case that Scottish jurymen get 10s. a day in civil causes, whereas English jurymen get only 1s. 6d.?

Sir Archibald Sinclair: Is not the hardship very much felt in rural districts where sometimes people have to travel upwards of 100 miles to the court?

The Lord Advocate: I can only say that I have had no representation on the matter.

SUMMARY PROCEEDINGS (WITNESSES).

Mr. Pethick-Lawrence: asked the Lord Advocate whether he is now prepared to reconsider his attitude towards the refusal by procurators-fiscal to give names and addresses of their witnesses to the defence in summary cases?

The Lord Advocate: As I stated in answer to a question by the hon. Member on 28th July, 1936, it is the practice for the names of witnesses for the Crown to be furnished to the defence in cases arising out of motor accidents, and in any other case in which Crown Counsel consider that it is reasonable that such information should be supplied. The practice works satisfactorily, and I see no cause to alter it.

Mr. Pethick-Lawrence: Is the Lord Advocate aware that, although in theory the position is the same as it is in England, in practice it works out differently, because in England an adjournment can be obtained in cases where the defence asks for one, whereas in Scotland it is very unusual to grant such a request?

The Lord Advocate: I am not aware of any practical difficulty arising under the present system. I can assure the hon. Gentleman that this question has been


considered again and again by my predecessors and myself, and it has not been found possible to devise any better method than that which is at present being used.

NATIONAL HEALTH INSURANCE.

Mr. Rhys Davies: asked the Minister of Health when it is proposed to amend the National Health Insurance Scheme so as to bring within its provisions young persons on entry into employment; and whether he will state the reasons for the delay?

The Parliamentary Secretary to the Ministry of Health (Mr. R. S. Hudson): I am not yet in a position to add anything to the repy given to the hon. Member on 15th March last.

Mr. Davies: Are we right in assuming that the medical profession's objections to the fee that has to be paid in the case of these boys and girls are holding up the Government's legislation?

Mr. Hudson: No, Sir. I said in my reply that the matter had been connected with the larger question of fees and that my right hon. Friend had agreed to the suggestion that the whole matter should be referred to an independent court of inquiry.

Mr. Davies: Is it not a fact that the medical profession declined to accept the offer of the panel fee suggested, and because of that the medical profession is holding up the Government's legislation?

Mr. Hudson: That is not altogether a complete description.

CARDROOM WORKERS (RESPIRATORY ILLNESS, COMPENSATION).

Mr. Sutcliffe: asked the Secretary of State for the Home Department whether he is now able to announce the names of the committee to be appointed to inquire if a workable scheme can be devised for providing compensation for cardroom workers disabled by respiratory illness?

The Secretary of State for the Home Department (Sir John Simon): Yes, Sir. I will circulate in the OFFICIAL REPORT a copy of the Warrant of Appointment of this committee.

Following is the copy:
I hereby appoint:

Dr. W. D. Ross, O.B.E., M.A., LL.D., D.Litt.,
Mr. P. N. Harvey, F.I.A.,
Mr. T. Hutson,
Professor George R. Murray, M.D., F.R.C.P., and
Mr. W. F. Wackrill, O.B.E.,

to be a committee to consider and report whether an equitable and workable scheme can be devised for providing compensation in the case of persons who, after employment for a substantial period in card rooms or certain other dusty parts of cotton spinning mills, become or have become disabled by respiratory illness as indicated in the report of the Departmental Committee on dust in card rooms; and if so to make detailed recommendations as to the provisions to be included in such a scheme, more especially as to the persons to whom benefit should be payable and the rates and conditions of benefit, the medical and other machinery for administering the scheme, the method of financing the scheme, and its approximate cost.
And I further appoint Dr. W. D. Ross to be Chairman and Mr. C. P. Gourley to be Secretary of the Committee.
(Signed) JOHN SIMON.
Home Office, March, 1937.

INCOME TAX (SPORTS CLUBS).

Mr. Parker: asked the Chancellor of the Exchequer whether he is aware that Schedule B (On occupation of lands) is now being demanded of cricket and other sports clubs in Romford on the full rental of their buildings and playing fields, without any deduction for the rental value of their buildings (pavilions, &c.) included in the rent paid; that these clubs are already paying under Schedule A (Property Tax) and Schedule D (Trade profits); that many of these clubs will be forced into bankruptcy and disbanded if these new demands are enforced; and whether he will take these facts into consideration in his forthcoming budget?

The Parliamentary Secretary to the Treasury (Captain Margesson): I have been asked to reply. My right hon. Friend is inquiring into the case in the Romford district which he thinks has given rise to the hon. Member's question, and he will let him have a further communication about it as soon as possible.

Oral Answers to Questions — UNEMPLOYMENT.

INSURANCE (SALARY LIMIT).

Mr. Foot: asked the Minister of Labour whether he has considered the


request from the National Federation of Professional Workers for the raising of the salary limit in unemployment insurance to £500 a year; what answer he has returned; and whether he will consider the advisability of carrying out this suggestion?

The Minister of Labour (Mr. Ernest Brown): I have taken note of the representations made by the National Federation of Professional Workers. The secretary of the federation has been informed that the question is under consideration.

Miss Rathbone: Does the right hon. Gentleman not intend to take notice of the recommendation of the Statutory Committee that the income limit should be raised?

Mr. Brown: I have already said that is under consideration.

Miss Wilkinson: Is the right hon. Gentleman taking into consideration the inequality between men and women as to the upper income limit? Is there to be any difference between men and women as regards the upper income limit?

Mr. Brown: The upper limit is £400.

Miss Wilkinson: Is it the same for women?

HONG KONG AND MALAYA (MUI TSAI REPORT).

Mrs. Tate (for Viscountess Astor): asked the Secretary of State for the Colonies whether he will see that the Mui Tsai Report is freely available for those who wish to purchase it in Hong Kong and Malaya?

Mr. Ormsby-Gore: Large stocks of the report have been sent to Hong Kong and Malaya, and I have no doubt that they will be freely available for purchase by the public.

Mrs. Tate: Has the fact that they are available been made known in Malaya and Hong Kong, as complaints have been received that they are not available?

Mr. Ormsby-Gore: Yes. I think the complaints arose from the fact that a few copies of the first draft were sent out by air mail and the remainder followed by ordinary mail.

IMPERIAL CONFERENCE (UNITED KINGDOM DELEGATION).

Mr. Attlee: (by Private Notice) asked the Prime Minister whether he is now able to give the names of the United Kingdom Delegates to the forthcoming Imperial Conference?

The Prime Minister (Mr. Baldwin): Yes, Sir. The United Kingdom Delegation at the Imperial Conference will be as follows:

Delegates.

The Prime Minister;

The Lord President of the Council;

The Chancellor of the Exchequer;

The Home Secretary;

The Lord Privy Seal;

The Secretary of State for Dominion Affairs;

The Secretary of State for the Colonies (representing the Colonies, Protectorates and Mandated Territories).

In addition, the following Ministers will represent the United Kingdom in discussions on certain questions included in the Agenda:

(1) Foreign Affairs and Defence:

The Secretary of State for Foreign Affairs;
The Minister for Co-ordination of Defence;
The President of the Board of Trade.

(2) Constitutional Questions:

The Attorney-General.

(3) Economic Questions:

The President of the Board of Trade; The Minister of Agriculture and Fisheries.

Other Ministers will be invited to attend as occasion requires, for example, the heads of the Defence Services for Defence questions.

Mr. Benn: Does the right hon. Gentleman propose to include the Secretary of State for India in the delegation?

The Prime Minister: My right hon. Friend will remember that the Secretary of State for India has not been included among the delegates, because from his position he is head of the Indian delegation, and is in constant attendance at the Conference.

BUSINESS OF THE HOUSE.

Mr. Attlee: Has the Prime Minister any statement to make on the business of the House after the Easter Recess?

The Prime Minister: The business will be as follows:
Tuesday, 6th April:—Second Reading of the Special Areas (Amendment) Bill.
Wednesday, 7th April:—Second Reading of the Physical Training and Recreation Bill, and Committee stage of the necessary Money Resolution; and, if there is time, Second Reading of the Statutory Salaries Bill.
Thursday, 8th April:—Second Reading of the Widows', Orphans' and Old Age Contributory Pensions (Voluntary Contributors) Bill, and Committee stage of the necessary Money Resolution.
Friday, 9th April:—Private Members' Bills will be considered.
On any day, if there is time, other Orders will be taken.

Resolved,
That this House do meet To-morrow, at Eleven of the clock; that no Questions shall be taken after Twelve of the clock; and that at Five of the clock Mr. Speaker shall adjourn the House without question put."—[The Prime Minister.]

NEW MEMBER (AFFIRMATION).

Thomas Edmund Harvey, esquire, for the University of Durham, the Victoria University of Manchester, University of Liverpool, the University of Leeds, the University of Sheffield, the University of Birmingham, the University of Bristol, and the University of Reading made the Affirmation required by Law.

BILL PRESENTED.

BRITISH NATIONALITY AND STATUS OF ALIENS (AMENDMENT) BILL,

"to give effect to the recommendation of the Hague Conference for the Codification of International Law," presented by Captain Cazalet; supported by Miss Wilkinson, Mr. Vyvyan Adams, Mr. Lovat-Fraser, and Miss Ward; to be read a Second time upon Tuesday 6th April, and to be printed. [Bill 109.]

MESSAGE FROM THE LORDS.

That they have agreed to—

Liverpool Exchange Bill, without Amendment.

That they have passed a Bill, intituled, "An Act to alter the constitution of the Kingsbridge and Salcombe Water Board; to make the Kingsbridge Rural District Council a constituent authority; to authorise the Board to construct additional waterworks; and for other purposes." [Kingsbridge and Salcombe Water Board Bill [Lords.]

Also a Bill, intituled, "An Act to extend the Mansfield District Traction Company's powers of running public service vehicles; to confer further financial and other powers upon the Company; and for other purposes." [Mansfield District Traction Bill [Lords.]

Also a Bill, intituled, "An Act to authorise the Burgess Hill Water Company to construct new Works to extend the limits of supply of the Company and to raise additional capital; and for other purposes." [Burgess Hill Water Bill [Lords.]

And also, a Bill, intituled, "An Act to make further provision with respect to the finance of the County Borough of Barnsley; and for other purposes." [Barnsley Corporation Bill [Lords.]

KINGSBRIDGE AND SALCOMBE WATER BOARD BILL [Lords].

MANSFIELD DISTRICT TRACTION BILL [Lords].

BURGESS HILL WATER BILL [Lords].

BARNSLEY CORPORATION BILL [Lords].

Read the First time; and referred to the Examiners of Petitions for Private Bills.

BILLS REPORTED.

BARKING CORPORATION BILL.

Reported, with Amendments, from the Committee on Group C of Private Bills (with Report on the Bill).

Bill, as amended, and Report to lie upon the Table; Report to be printed.

LONDON PASSENGER TRANSPORT BILL.

Reported, with Amendments, from the Committee on Group E of Private Bills (with Report on the Bill).

Bill, as amended, and Report to lie upon the Table; Report to be printed.

MERCHANT SHIPPING BILL.

Ordered,
That the Lords Amendment be considered forthwith."—[Dr. Burgin.]

Lords Amendment considered accordingly.

CLAUSE 3.—(Short title and citation.)

Lords Amendment: In page 2, lines 22 and 23, leave out
1936, and those Acts and this Act
and insert
1937, and shall be included among the Acts which.

3.53 p.m.

The Parliamentary Secretary to the Board of Trade (Dr. Burgin): I beg to move, "That this House doth agree with the Lords in the said Amendment."
This Amendment is consequential upon the passing of the Merchant Shipping (Spanish Frontiers Observation) Act. The object is to omit "1936" and to insert instead "1937" as required by that Act.

Question put, and agreed to.

Orders of the Day — CONSOLIDATED FUND (No. 2) BILL.

Considered in Committee, and reported, without Amendment.

Motion made, and Question proposed, "That the Bill be now read the Third time."

Orders of the Day — ARMAMENTS CONTRACTS.

3.54 p.m.

Mr. T. Johnston: We take this opportunity of raising the questions of prices, profits, speculation and the plunder of the nation in connection with its rearmament programme. Two days ago the right hon. Gentleman the Minister for the Co-ordination of Defence admitted and deprecated speculation on the metal market but added that, in the main, such speculation had not, so far, affected prices. This view is somewhat different from that which he expressed in a speech made outside this House some time previously. On that occasion he was more emphatic, and he said that nothing in the way of speculation had affected the price of our armaments.
There is a French proverb to the effect that the more a thing changes the more it remains the same, and we find from past history as we find to-day that the hour of the nation's need is always the hour of capitalism's greatest opportunity. It is necessary that we should remind ourselves of what happened in 1914 and 1915, because what happened then is precisely what is happening now and will, in our view, inevitably have the same results and consequences. May I remind hon. Members that on the outbreak of the last War the Trades Union Congress and the Executive Council of the Labour party and the General Federation of Trade Unions, combined to make an offer to the Government of the day. Speaking for their followers they said they would not seek to exploit the War situation for financial gain, provided that the Government took the necessary steps to prevent the capitalists exploiting the nation for financial gain. That offer was refused—politely, but nevertheless refused.

Mr. Henderson Stewart: Can the right hon. Gentleman give the date?

Mr. Johnston: I can obtain the precise dates if the hon. Member wants them. He will find particulars in the "Round Table" magazine of December, 1915, and in the OFFICIAL REPORT of 15th November, 1915, when they were stated by the late Sir Alfred Markham. That offer, as I have said, was refused and then the ramp began. In March, 1916, we find the Bank of England issuing advertisements through the public Press containing the following words:
Unlike the soldier, the investor runs no risks.
This was when they were "boosting" the 5 per cent. Exchequer Bonds. In July, 1915, the present President of the Board of Trade introducing the Price of Coal (Limitation) Bill, said that within the previous year the coal-owners of Great Britain had increased prices to the British people—I am leaving out the foreign markets — to the extent of £20,000,000. That plunder went on in increasing volume until the Sankey Commission reported that the coal-owners of this country during the War had reaped additional profits to the tune of over £100,000,000.
As regards shipping, a responsible organ like the "Statist" declared that


shipping profits went from £20,000,000 in 1913, to £250,000,000 in 1915. The late Sir John Ellerman at the end of the War was in possession of £35,000,000 worth of shipping. The scandal was so grotesque that the then leader of the Conservative party, Mr. Sonar Law, himself an investor and a shareholder in a shipping concern, stood up in this House and denounced with great fervour and emphasis the scandal which had gone on in the shipping world. But this plunder went on in every direction. We had the amazing spectacle of the Food Controller, himself a great merchant in the City of London, stopping the importation of Danish butter until the market was more brisk. Then, in order to balance matters, he got up in another place and proposed that the national Budget should be balanced by taking £20,000,000 from the moneys paid to soldiers and their dependants.
When we come to armaments we find that the position was really more indefensible, and it is that position that I desire more particularly to raise to-day. The Government of that time took practically all the steps that the Minister for Co-ordination of Defence is taking now to protect the national interest, and it took steps that the right hon. Gentleman has not yet taken, steps which I prophesy he will be compelled to take to protect the solvency of this nation from the price ramp in armaments and materials which has just begun. The Government in 1915 set up national shell factories in order to counter the rapacity of those who were exploiting the national interests at the time, and as a result of those national factories the Government got the price of 18-pounder shells reduced by no less than 40 per cent. The Metals Department at the Ministry of Munitions, upon the authority of my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George), saved the nation no less than £15,000,000. Now it is said that the people who are in these businesses are just as patriotic, just as considerate of the national necessity, as the people in other industries and other trades and professions. I regret to say that that is not borne out by the history of the last 20, 30, 40 and 50 years; it is not borne out either here or in other lands. There is something in this industry which leads men engaged in it to abandon all patriotic considerations and to exploit the national

necessity—and more than that, to endanger the national interest.

Sir Robert Horne: To what industry does the right hon. Gentleman refer? There are innumerable materials that go to the making of any armament. Does he include them all? Is the manufacture of steel, for example, supposed to be an armament purpose? It concerns armaments?

Mr. Johnston: I am going to supply the right hon. Gentleman with the information, if he will bear with me.

Sir R. Horne: I wish only to follow the argument.

Mr. Johnston: The right hon. Gentleman cannot follow my argument if he will not allow me to state it, and I am going to state it; I came here prepared to state it. I could give the instance of British firms, armament finns, that fortified the Dardanelles against us. Vickers was the name. I call that an armament firm. During the Russo-Japanese war the city of London financed Japan at 9 per cent. and coaled the Russian Fleet at the same time. I call that making profits out of armaments, too. I do not know what the right hon. Member for Hillhead (Sir R. Home) would call the Whitehead torpedo factory that was instituted at Fiume, in Austria, and built torpedoes which were later used to sink British shipping in the Mediterranean. I call that an armament firm. It is still permitted by law. I do not know what the right hon. Member for Hillhead will say about it; I shall be interested to hear. I do not know what he will have to say about the situation which, right up to the outbreak of war, compelled our manufacturers to pay a royalty of 1s. 3d. for British shells to Messrs. Krupps.
The whole business wound up at the end of the War with the Board of Inland Revenue officially reporting to a Select Committee of this House that 360,000 people to their knowledge had increased their fortunes over the pre-war basis by no less than £3,000,000,000. Let hon. Members read the revelations of the American committee of inquiry, published over a year ago, about the operations of the Electric Boat Company and Messrs. Vickers. Let them read how one supplied munitions only to Peru while the British firm was to supply only to Chile, Peru


and Chile being at war. We had to provide one armament and the Americans to provide the other, and then, if you please, Messrs. Vickers and the Electric Boat Company were to divide the profits at the end of the year. The scream of the joke was reached surely when Professor Delaisi could prove that the great French manufacturing firm of Creusot and a great German manufacturing firm jointly arranged a clearing-house in Switzerland during the last War, whereby Germany was to be supplied with the aluminium for its Zeppelins, and carbine and the cyanamide for its explosives, provided that the French got German magnesium in exchange. After the last War we had another outbreak between Greece and Turkey, when the Entente Cordiale was still in operation, whereby our firms supplied one side in the War and the French firms supplied the other.
That is what I mean by saying that there is something in this industry which seems to make it more open to charges of non-patriotism and anti-patriotism than are most other industries in the country. This is the industry, with all its allies and associates, that the right hon. Gentleman and the Government say must continue to operate on a basis of private profits. It is quite true—I pay him my tribute for this—that he is taking some steps to limit the plunder that is inevitable in such a time as this. There have been great industrialists in this country who have averred that under private enterprise you cannot prevent the private enterprisers from "dodging." Let me quote what the late Lord Leverhulme said to his shareholders at their annual meeting on 28th April, 1921:
We have always depreciated fully and amply all the profits not only of the parent company at Port Sunlight and elsewhere, but of all associated companies, as also have our predecessors in those associated companies prior to the time of their purchase by ourselves. This depreciation has in many cases been excessive. For instance, in one associated company, when I looked into the depreciation account of that company, I found that the whole of the plant, machinery, buildings, etc., had been steadily depreciated at a fixed rate year after year, and that the depreciation fund stood in 1920 at £20,000 more than the amount appearing on the books as the value of the properties as depreciated. Therefore the whole of the plant, machinery and buildings of that company stood at £20,000 less than nothing.

The right hon. Gentleman the Minister for the Co-ordination of Defence is trying to watch their on-costs. That is so; I read of it in the report of the Select Committee on Estimates. But there are 100 methods by which the State can be dodged there. The inevitable result has already begun to be applied. In finance the cost of borrowing to municipalities is rising. It has risen steadily week after week during the past two months. Engineering firms are hopefully floating themselves at fabulous prices. I have in my hand the prospectus of a quite reputable firm, the Scottish Machine Tool Corporation, Limited, floating themselves into a joint concern with a capital of £400,000, appealing to investors to invest in 1,480,000 ordinary shares of 4s. each at a premium—at 5s. a share. When we look at the record of these concerns we find that jointly in 1934 they showed a loss of £11,045, a profit in 1935 of £298, and in 1936 a profit of £1,17,000. This quite reputable concern is now, on the basis of armament orders, on the basis of the boom which is coming, inviting investors to subscribe to their company in the expectation of getting fabulous profits.
Hon. Members will doubtless deal with this subject more in detail, but I have here in my hand instances of landowners asking 50 years purchase for land for aerodromes. It is the Oxford University Trust. But there are others, all at the same game. There is the hon. and gallant Member for Accrington (Major Procter), I think it was, who has made speeches and written articles about cases within his knowledge, in which he calls the landowners "vultures." That is a term you might expect to be used from these benches about the landowning fraternity, but when you get back-bench Members opposite beginning so to describe the landowners who are exacting these fabulous prices from the nation in its hour of need, Ministers and the country can begin to be assured that there is not only smoke but there is fire also.
Take shipping. I have been asking some questions of the President of the Board of Trade on this matter, and I should like to ask the right hon. Gentleman the Minister for the Co-ordination of Defence how he justifies this. Here are British armament manufacturers chartering foreign-owned vessels to make hundreds of voyages. In one year there


were 55 foreign vessels with cargoes or in ballast going out, and 26 coming in, all coastwise traffic, to and from other British ports. They are allowed to operate in their motor-driven vessels with one-third fewer seamen and engineers than British vessels are compelled to carry, and they are exempt from British Income Tax. The profits on these charters do not yield a penny to the British Treasury. Here are patriotic armament kings in Scotland, England and Wales deliberately choosing vessels flying foreign flags to carry British armaments and British materials from British ports to British ports, and when the hour of danger comes, as come it may, the right hon. Gentleman and his friends will not be able to use these vessels. They are foreign-owned vessels, and they will be away across to Holland, Germany, Sweden and Norway again. What British shipbuilders, British seamen, British engineers and British railroad proprietors have to say about this sort of thing I cannot imagine.

The Minister for the Co-ordination of Defence (Sir Thomas Inskip): I am sorry to interrupt the right hon. Gentleman, but I am anxious to follow his argument. Is it his suggestion that British armament firms are specially using foreign vessels, or is he dealing with the whole system of coastal shipping in connection with our defences in case of war?

Mr. Johnston: I am dealing for the moment solely with the use made of foreign ships by British armament manufacturers and by firms engaged in the scrap-iron trade and so on, and ancillary industries, giving a deliberate preference to foreign shipping while there is British coastwise shipping available, and thus making extra profits.

Sir T. Inskip: Again I do not want to interrupt, but I want to follow this in order, if I can, to be of help on this point. Does the right hon. Gentleman suggest that armament manufacturers are exporting scrap in foreign vessels or importing scrap in foreign vessels?

Mr. Johnston: Perhaps I should have made it a little more clear, but I was dealing entirely with coastwise traffic from British port to British port. I was not dealing with any cross-seas traffic at all for the moment. I am dealing purely with the fact that British armament manufacturers are giving preference deliberately to

foreign-owned ships. I do not know how far they are foreign owned. I do not know whether in some cases British armament manufacturers have not shares in these ships; I cannot prove that—I have heard statements made—but I do know that the practice is going on now, and I should like to hear the views of the railway concerns and of the shipowning concerns, as well as the views of the Government, as to the reasons why this traffic is permitted to develop. I can give the right hon. Gentleman the names of vessels that have gone hundreds of voyages of this nature during the past year and a-half, and it is going on worse to-day than ever.
I have questioned the Board of Trade repeatedly on this matter. To-day I asked a question of the Board of Trade, but they refused to give me the names of the charterers. I happen to know the names, but the Board of Trade refused to give publicity in this House to the names of these patriotic charterers. I do not know why. I am told it has never been the practice to divulge these names, and I suggest to the right hon. Gentleman that he should put a watchdog or two on to the Board of Trade in this matter. The Board of Trade has the finest collection of officials who are unable to give any information on a subject of any Government Department.
Now I come more particularly to questions which may interest the right hon. Gentleman's own Department, and first there is the question of profits in armaments going on now. The Handley-Page Company can pay a dividend of 265½ per cent., the Hawker-Siddeley Company 40 per cent., the Bristol Aeroplane Company 22½ per cent., Short Brothers 30 per cent., the Fairey Company 10 per cent., and Vickers, the highest for the last 18 years, 10 per cent. What is the right hon. Gentleman going to do about that? I am well aware that the most spectacular increases which have taken place in recent months have been in commodities which are very largely outwith the right hon. Gentleman's control. I do not blame him for rises which take place, for instance, in rubber or commodities that are purchased outside the shores of this land, although even there he might at least have considered the proposition put forward repeatedly from these benches that we should have an Imports Regulation Board. Between 17th February and


10th March zinc has jumped from £24 15s. per ton to £36 17s. 6d.; lead is up from £27 17s. 6d. to £36; tin is up from £230 10s. to £300 15s.; copper is up from £58 3s. 9d. to £76 per ton.
There is one point on which, I think, the Government are blameworthy in this matter. Suppose the right hon. Gentleman and his Front Bench were members of a town council committee dealing with street widening and the acquisition of property or land. If they made up their minds that it was in the public interest that they should acquire a particular property, say a block of shops, would they make that announcement first in the public Press and then go away and buy it? They certainly would not. Every hon. Member in this House who has been a member of a local authority would spurn such an idea at once, but that is precisely what the Government did. The Government first of all issued a White Paper declaring that they were going in for rearmament on a big scale, and then they proceeded to buy. To some extent the right hon. Gentleman, I understand, had made forward purchases, but I also understand that they have been almost infinitesimally small and certainly insufficient to prevent this great price ramp which has taken place on the market.
There is no use in saying that speculation is going on only to a very limited extent. Take papers like the "Financial News" and papers like the Rothermere Press, the "Daily Express," and so on. I have quotations from them all here, describing in detail the frenzied, frantic speculation that went on in the metal market immediately the Government's White Paper was published, and the right hon. Gentleman and the Government have not seen fit to take any steps in advance to protect the national interests, though that very announcement sent prices rocketing.

Mr. Bernays: I do not quite follow the right hon. Gentleman. Should we have armed in secret?

Mr. Magnay: Does not precisely the same thing happen with a town council when it has a housing scheme? Do not building materials at once go up?

Mr. Johnston: With regard to the first question, whether we should have armed in secret, in fact that is what has been

done. The only thing that has been done openly is that the purchase of materials has been done in such a way as to give the profiteers a chance to make extra plunder. With regard to the second interruption, about what a town council would do in housing, it would do what every town council, every city council in the land, does. The majority decide, first of all, to buy, and they then instruct their town clerk to get a neutral lawyer, who will not be suspected of having any connection with them, to get an option on the property, and then they come out openly, get their authority from the council, and proceed to purchase.

Mr. Magnay: When the Labour Government decided on their housing policy they informed the whole country, and the consequence was that all building materials and wages went up.

Mr. Johnston: In 1924 very definite steps were taken by the Labour Government, under the late John Wheatley's scheme, to control prices, and very forward arrangements were made about labour, with the co-operation of Labour leaders. But I do not want to be led aside. It is true that Members now on the Government benches so disliked our measures for controlling prices, plumbers and house building that they went into the Lobby against them. However, as I say, I do not want to be sidetracked. The point that I am making is this, that the Government make a public announcement and send prices sky-rocketing, and to the extent that they have done that and failed to control the private enterprise speculators, they are blameworthy; but I would add that I agree that on foreign-produced commodities, such as nickel and so on, it is not within the control of this country alone, in a world shortage, to prevent prices sky-rocketing. We could, by means of an import board, have regulated the flow into our markets and prevented the speculation and plunder that take place inside this country from being operated.
I want to raise a matter that was mentioned at Question Time to-day. I refer to the offer made by the engineering firm of Ransomes and Rapier, of Ipswich, to supply shells on a no profit and no loss basis, and I want to give the House in chronological sequence what happened in this case. I am glad to see the Secretary of State for War here, for I am now


referring in particular to the War Department. On 10th July, 1936, this firm, an old-established one of 70 years standing, who have carried out great public works all over the globe, got a request from the War Office to assist in the production of shells. Seven days afterwards the firm accepted the War Office request, but added that they insisted upon producing whatever shells they could on a no profit and no loss basis, as they declined to make any profits out of the national necessity. On 15th September the company sent in a firm offer. At Question Time to-day I gathered that a statement was made that no firm offer was sent in. A firm offer was sent in on 15th September. The price of the tender was 17s. 11d. per shell. At that time, to the best of our knowledge and belief, that price was 3s. 7d. cheaper than the price that was being tendered by other manufacturers. I do not say it was the cheapest price that was offered, but it was 3s. 7d. cheaper than that tendered by other manufacturers who got the contracts. I am informed that it was 9s. 1d. cheaper than the then Woolwich price.
On 24th September the firm were politely informed that their premises and plant were so good that it might be advantageous if they were used in the production of tanks. Again the firm said that they were willing to do whatever the nation wanted, but it was to be on a no profit and no loss basis. The price they had tendered for shells included all the expenses they believed they would require to incur, but at the instance of the War Office 10 per cent. was added as cover for emergencies which they could not calculate at the moment. The firm, however, were determined that if at the end of the contract they had made any profits out of that 10 per cent., those profits would go back to the Treasury. We have got to 24th September, when the suggestion was made that the firm should not undertake shells, but tanks. On 10th October they were told verbally that their price was favourable for shells, and that the contract would be placed with them. On 24th November they were told for the first time that their premises were not suitable on grounds of vulnerability. Being at Ipswich, I suppose, they were possibly more vulnerable to attack from hostile aircraft than if they were at, say, Woolwich or Deptford. This is the first time the firm were told that.

They were also told that their price was now not the most economical. On 9th November, they had been told, "Thank you very much for your offer to deal with tanks on a no profit and no loss basis, but we have made all the arrangements we want for tanks, so you are off there, too."
The Admiralty give prices in this House as to its purchases of oil. The Air Ministry refuse, but a trade paper can write to the Air Ministry and get the figures and publish them. We are asking to-day for the production of the precise figures at the time when that firm made their offer in contrast with the figures offered by all the other firms who got contracts on the basis of these tenders. I am not arguing that this firm were the cheapest; I do not know. I am arguing that we ought to have the fullest inquiry by a Committee of this House, including representatives of the Opposition. We want to know in the national interest whether this firm of standing and repute, which makes a patriotic offer to produce munitions on a no profit and no loss basis, have had a square deal or not. We are entitled to know that. It will be no satisfaction to the Government or the country if that request is refused. it is not an unreasonable request that a Committee of this House should be permitted to examine the precise figures of all the tenders at that period and to report whether it be the case that this firm's offer for the use of their plant, machinery and energy and their patriotic spirit have been turned down by a Government which is more intent on standing up for private profit and private exploitation than it is on standing up in the national interest. I have not said anything about the increased costs which are beginning to be observable in the food market. An increased cost of food will begin to affect wages, and wages again will begin to affect prices, so that the basis of the Estimates for rearmament will most assuredly not be the actual costs six months hence.
I put it to the Government, first, that we should have an inquiry into this Ipswich business to satisfy the minds of Members of this House that there has been a square deal; secondly, that the Government should, as the Government were compelled to do in 1915, set up factories of their own as a check; thirdly, that they should take every possible step


—not only some steps—to limit the profits and plunder in the armament industry. If we must have armaments, if we must go in for a huge programme of rearmament, let us not allow that programme to be conducted by profiteers without any conception whatever of the national interest, requiring armies of detectives, chartered accountants and watch-dogs of one kind or another to prevent them from robbing us in our hour of need. Because we take the line that the national interest is supreme and that private enterprise must give way to it, we ask the Government, even at this late hour, not to yield to the speculators in land, in money or in metals. Give us a committee of inquiry and let us have as united a nation as is possible in the production of armaments.

4.42 p.m.

Sir Isidore Salmon: I venture to take part in this Debate, because I am Chairman of the Estimates Committee which presented its first report a few days ago. The right hon. Gentleman the Member for West Stirling (Mr. Johnston) seemed to base the whole of his argument on what happened in the last War, unless it be that he was taking for his text the headline of a newspaper which said, "A thousand per cent. profit on armaments." That was the headline in the "Daily Herald" on 23rd March. Such misrepresentations create a wrong atmosphere for those who read them really think, because they see them in print, that they are true. I would urge the House to study carefully the report of the Estimates Committee, which consists of Members of all sections of the House. It came to the conclusion, after listening for many days to evidence from the Director of Contracts of various departments that they were satisfied:
that the methods followed are soundly conceived, are fair both to the taxpayer and the contractor, and they are of opinion, so far as an estimate can be formed, that they have been effective up to date in preventing profiteering at the taxpayer's expense.

Mr. Garro Jones: Who drafted the report?

Sir I. Salmon: I do not know if that observation is meant to be offensive—

Mr. Jones: May I draw the attention of the hon. Member to the fact that that report only deals with figures so far as

they can be estimated? Everybody knows that when a report is drafted the exact wording by the draftsman, who is usually the Chairman, often gives it a meaning which may not be precisely the meaning of the Committee, although I do not say it was so in this case.

Sir I. Salmon: The hon. Gentleman is trusting to his imagination instead of to the facts. When it was drafted it was circulated to every Member of the Committee, on which the Labour party had a large number of eminent and competent persons. I should like to say here and now that that was a unanimous report. I do not like to hear hon. Members get up in this House and make statements without having first ascertained the facts. The right hon. Gentleman has made statements this afternoon which, when you investigate them, have no truth whatsoever in them. He started by saying that the great thing to do would be to set up national factories for the production of armaments. He then said that a certain firm had offered to produce armaments of a particular class at a particular price, and that the Woolwich price for them was 9s. 1d. more—that is, it is more under Government control. If ever there was any justification for assuming that because the Government are running a factory they can produce things cheaper, it has been entirely refuted by the statement of the right hon. Gentleman himself. He has provided the proof that what he has advocated cannot be carried out.

Mr. Johnston: Would the hon. Gentleman, who is the chairman of the Estimates Committee, permit me to remind him that national factories reduced prices by 40 per cent.?

Sir I. Salmon: I am taking the figures which the right hon. Gentleman himself mentioned.

Mr. Johnston: I can give other figures.

Sir I. Salmon: I am dealing only with the figures which the right hon. Gentleman has given us. I am within the recollection of the House. The right hon. Gentleman said, and made a point of it, that the Woolwich price was even dearer than that of the firm which offered to supply at cost price. Does the House realise what is the first thing which the Defence Departments have got to do,


having regard to the Government's programme? It is not the case that there are a large number of munition-making firms in the country, far from it, and the Defence Departments have to go round and appeal to the patriotism of manufacturers to undertake the manufacture of armaments, even though it means giving up a part of their normal business. Hon. Members should bear in mind that firms only do it under great pressure, and because they are looking at the matter from the national point of view. It is not the case, as the right hon. Gentleman suggested, that directly it is a question of the safety of the country the capitalists are only out to make money without any regard to the interests of the country.
I want to demonstrate beyond all doubt that the premises on which the right hon. Gentleman has based the whole of his case are entirely wrong. The Government have had great trouble to get a large number of firms to curtail their normal business and go in for the manufacture of the things required by the Defence Forces, and when they have succeeded in persuading them to do so they have then said to the firms, "You will have to limit your profits." Not only do they say that, but they have organised a system of inspecting their books and checking their accounts on which I think they are to be congratulated. For the thoroughness with which the whole position has been taken in hand by the Defence Departments the permanent staffs deserve to receive the compliments of the House. The position has called for an enormous amount of care on the part of the Defence Departments. They not only look into the question of the prices that these firms newly come into the manufacture of armaments are to charge, but they go most meticulously into the question of overhead charges, a very important item; there is no half measures in the way they deal with it.
Not only do they deal with the accounts from all the different aspects. They know that whether a thing can be produced cheaply or not depends to a large extent on the way a factory is laid out, and the Departments are keen to see that these new firms do lay out their factories in such a way that they can produce as cheaply as it is humanly possible to do so. The right hon. Gentleman asked, "Why do not the Govern-

ment institute a check by having their own factories?" I would remind him that the shadow factories which are being established will demonstrate beyond all doubt whether the prices at which other firms are supplying goods are cheaper or dearer than the prices at which they can be produced in the shadow factories. Those shadow factories are worked on an entirely different basis. The only money that the persons get is a percentage on supervision. The House and the country can feel certain that all precautions have been taken that could reasonably be expected. I do not say that if there had not been more time certain improvements could not have been introduced, but in the emergency in which we find ourselves there has not been time to sit down and go into many points which one would like to deal with. The large numbers who have to be trained to execute these very large orders cannot be trained all at once. As they gain more experience the smoother the machine will work.
I think I can say without any fear of contradiction that all reasonable steps have been taken and are being taken. The report of the Estimates Committee has made certain recommendations, and I feel sure that when the Defence Departments have had time to consider them they will bear them in mind in making future contracts and arrangements. The right hon. Gentleman rather suggested that because dividends were paid by certain firms they were profiteering, but the question must arise of what proportion the Government business they are doing bears to their ordinary business. It is absurd for anyone to say dogmatically that because a particular armaments firm or a firm which has gone in for the making of armaments ancillary to its normal business is paying a dividend it has necessarily made large sums of money out of the Government. By the very system that is in existence that is prevented. I do not want to weary the House by going into the details of how the Government are protected against such a thing occurring, but I ask those who criticise the Government for allowing profiteering to pay the Estimates Committee the compliment of reading their report, and then they will come to a different conclusion, and will not be content to rely on headlines in newspapers which state, "A thousand per cent. profit on armaments."

Mr. Johnston: I never said anything of the sort.

Sir I. Salmon: I quoted what a particular newspaper said, a paper which I am sure is read with great gusto by the right hon. Gentleman. It is the "Daily Herald."

Mr. Garro Jones: It may be that it is the hon. Member himself who is misleading the House. For every additional 10 per cent. which an armament firm Makes by way of income, its capital appreciates out of all proportion to the amount it gets in revenue, and the speculators may well make 1,000 per cent.

Sir I. Salmon: I do not see what that has to do with it. The hon. Member will mix up the price that the Government pay for armaments and the price the speculator pays for shares. He should keep the two things separate, because he must see that what the speculator pays for his shares is no business of the Government. The business of the Government is to see that the contractor does not make an unreasonable profit, and that they are doing in a very efficient way. The right hon. Gentleman, in answer to an interruption, referred to the great foresight of the late Mr. Wheatley as regards the protection which he gave to the country when he was a Minister in the Labour Government of 1924. It might interest the right hon. Gentleman to know this, that he entered into such an arrangement that it is scarcely credible that a Minister occupying his position should be guilty of entering into an arrangement that was so unbusinesslike; one cannot conceive it possible that a man occupying his position should have entered into such an arrangement.

Mr. Johnston: That is a mouthful, but we had better have something specific.

Sir I. Salmon: I do not make a statement of that kind unless I have some justification for it, and I say that if any reasonable person were to read the arrangements which Mr. Wheatley entered into he would say they were unbusinesslike. The right hon. Gentleman shakes his head, but he does not know what the arrangements were.

Mr. Johnston: As a matter of fact I do. I was the junior representative of the Scottish Office at the time, and know what all the arrangements were, and I know a great deal more about it than does the hon. Member.

Sir I. Salmon: Then it does not reflect credit upon the right hon. Gentleman's acumen. I am challenged as to the arrangements that were entered into. [HON. MEMBERS: "Tell us what they were."] The right hon. Gentleman himself says he knows what they were, and I say that if you read the arrangements that were made with a certain industry at that period you will find that those arrangements were anything but businesslike, but I should be called to order if I were to go into that question in any more detail. [HON. MEMBERS: "What are the arrangements?"] I will conclude by saying this. One hears a great deal from time to time as to the importance of competitive tendering. I think it is equally important to make sure that it is effective tendering, and hon. Members will observe that in the report of the Estimates Committee we go out of our way to call attention to that particular point.

Mr. Gallacher: What about Wheatley?

Sir I. Salmon: I must say this, in conclusion: If the Departments will take heed of some of the suggestions which we have made, as I am quite sure they will, I believe, in common with every other member of that Committee, that all reasonable precautions will be taken to see that the public are not being exploited.

Mr. A. V. Alexander: As Chairman of the Estimates Committee, could the hon. Member tell us what the Estimates Committee take as a fair and reasonable basis of profit?

Sir I. Salmon: May I call the attention of the right hon. Gentleman to a paragraph in the report which deals with that point? It says that it is difficult to lay down a hard-and-fast rule. Surely no one knows better than the right hon. Gentleman himself that, in dealing with a particular contract, whether large or small, you must take each of the factors into consideration, and it would not be to the interest of the State that a definite profit should be stated that the firm ought to make. As a matter of fact, the right hon. Gentleman knows that the Government are very careful to see that the profit should not exceed, shall we say, x [An HON. MEMBER: "What is it?"] There used to be contracts given where 10 per cent. was allowed to the contractor. The Government decided that that was a


very bad principle, and I venture to say that they were right. Now they deal with it from the point of view of the value and the magnitude of the contract, and they consider all those factors before they satisfy themselves that the firm would receive a reasonable profit. They have also introduced this system, which I think is a very good one as an incentive to reduce prices: if they produce an article cheaper than bogey price the two sides—the Government on the one hand and the contractor on the other—share in the saving. I think this all goes to prove the businesslike way in which this subject has been approached.

5.2 p.m.

Mr. Dingle Foot: I do not propose to follow the hon. Member who has just sat down into all the recommendations of the Select Committee on the Estimates, except to say this, that as yet they remain recommendations, and I do not think we have yet had any assurance that the very moderate suggestions they made are going to be carried into effect. It is evident that there is considerable cleavage of opinion on this subject, but I think that Members of all parties ought to be grateful to the right hon. Gentleman the Member for West Stirling (Mr. Johnston) for raising this matter this afternoon; because, although opinion on nationalisation and kindred topics may differ as between one party to another, I think members of the public belonging to all parties are very deeply concerned at the moment about the possibility of profiteering in arms. That is so for two reasons. First, the taxpayers of this country are being called upon during the next five years to shoulder an enormous burden for rearmament. It is a prospect that they contemplate with fortitude, not with enthusiasm; but I think that there would be very real indignation throughout the country and in all political parties if it were thought that some substantial part of that sum which has been voted, or is being voted, for rearmament in the next five years were going to be spent in inflated, profits for certain industries.
Secondly, I think I shall have the assent of all hon. Members to this—I do not think there was any feature of the last War which left quite so much resentment behind as the fact that a very few people were making fortunes while a great number had to be in the trenches.

It has, I think, been the experience of all hon. Members, when attending meetings of their supporters in all parts of the country, that that has left behind a deeper feeling of bitterness than any other memory of the last War. I think it is perfectly true that that section of public opinion that does not normally support the Government has somewhat reluctantly come to the conclusion that a large measure of rearmament is unavoidable, and also that it is unavoidable that there should be some strengthening of the personnel of the Defence Forces. But there is, I think, a very general determination that the sacrifices of the many shall not on this occasion be made simply to swell the profits of the few. Those are general propositions which I think will command almost universal assent.
But the question I want to put to the House is this: Have we all the assurances on that question to which we are entitled? We have had one or two pronouncements recently on these matters from the right hon. Gentleman the Minister for the Co-ordination of Defence. Speaking in this House on 18th February, the right hon. Gentleman dealt with this matter and he said:
I have been asked whether we are getting all we want as economically as possible. There is some suspicion that a Government Department enters into a contract a little wildly, without check and without supervision. Not a single contract is entered into on those terms. Where competitive tenders are impossible every tender -and contract is sublected to an exhaustive examination by the costing branches.—[OFFICIAL REPORT, 18th February, 1937; col. 1424, Vol. 320.]
The right hon. Gentleman went on to stress the care which was exercised by the Defence Departments when they were examining the contracts. Only on Monday of this week the right hon. Gentleman returned to this question again and he gave a very similar assurance. He said:
In every case where possible competitive tenders have been called for. In a great many cases a competitive tender is not possible because the equipment is specialised in one particular firm, but in cases where competitive tenders are obtained they can be checked in many cases as to costs by the experience of the Royal Ordnance Factory. But in cases where competitive tenders are not possible there is a most elaborate examination by competent accountants, by the costings staffs of the Services."—[OFFICIAL REPORT, 22nd March, 1937; col. 2647, Vol. 321.]


Whenever this question has been raised the right hon. Gentleman has made that reply—that the Services concerned take the utmost care to inquire into these matters and see that no excessive profits are made. But it is precisely this method of checking which was described by the Royal Commission on Armaments Manufacture as not being sufficient. The Royal Commission was not as definite in all aspects of its report as some of us might have wished, but it was perfectly emphatic on this point. It said, in paragraph 137 (page 45):
We think, however, that this is a subject which requires further consideration and attention by the Government. We do not think that it will be sufficient for the purposes we have indicated to ensure that the Defence Departments are themselves satisfied that the profits allowed to private manufacturers under particular contracts are fair and reasonable. Nor do we believe that a measure of taxation, such as the Excess Profits Duty which was enforced during and after the last War, will prove satisfactory to meet the essential objects in view. Under the scheme we have indicated in Chapter VIII control of prices would fall within the purview of the body we have suggested. It should, in our opinion, be an essential characteristic of whatever system of control be adopted that, while providing reasonable remuneration on a scale sufficient to ensure the co-operation of private industry in the service of Imperial defence, it shall be such as shall prevent excessive profit and at the same time satisfy the public that it does so.
In other words they make it perfectly clear in this paragraph that they consider that the methods of the Service Departments are not sufficient. The Royal Commission proposed in Chapter VIII that there should be a separate body set up. Whether it be a National Armaments Board or something else, they want a separate body with a Minister answerable for it in this House, and they propose that it should be one of the chief functions of this new organisation to deal with the sort of matters we are discussing this afternoon. Dealing, on page 44 of the report, with the duties of such a body, they referred in particular to costings and the control of prices and the inspection and authorisation of all orders received from abroad by armament firms. In their view it was essential that these matters should be handed over to the new organisation which they wanted to see created.
I am afraid that hon. Gentlemen opposite must be tired of hearing questions

asked from this side of the House about the Royal Commission's Report, but we shall continue to ask them until we receive some kind of answer. The Royal Commission's Report was made available to this House last October. We understood that it had been available to the Government at least a month before that. The Government thus have had at least seven months in which to consider the recommendations of that Royal Commission. If we were dealing with a matter for which a great deal of time were available, or if we were dealing with some academic question, that would perhaps not be a very long period, but here we are dealing with a question of urgency, and surely it is reasonable to ask that, after seven months, the Government should have made up its mind what it is going to do about the Royal Commission's Report.
I want to make a very brief reference to a matter which was raised by the right hon. Gentleman the Member for West Stirling—a matter which I ventured to raise at Question Time, that is, the negotiations that took place between the War Office and the firm of Ransomes and Rapier, Limited. I put down a question to-day because there had been considerable publicity given to this case in the Press, and I received an answer the effect of which was, first, that the contract was not given to this firm because there had been a lower tender; secondly, that this firm wished to be indemnified against any loss; and, thirdly, that this firm wanted its building to be paid for. I will come in a moment to the question of the lower tender, but if the information which I have received is correct—and I received it from the managing director of the firm itself—it is not the case that this firm ever asked to be indemnified against any loss they might make. The information which has been supplied to me is that the price they quoted was a firm price. If they had made a loss after that price was quoted the loss would have been borne by the firm. As regards the building, it was never arranged that their building should be paid for. There was, I think, some suggestion of that in the first place, but it was afterwards agreed, in the negotiations that were going forward, that if the contract were given, the building should be paid for out of the extra 10 per cent., and if, after that, there was any profit


left over, as the right hon. Gentleman correctly said, this firm proposed to return it to the Treasury.
Now the right hon. Gentleman went through the correspondence, and I do not propose to go over the ground which he covered. It is perfectly true that negotiations between the War Office and this firm were going on for a considerable time. I think I am right in saying that the question of this firm's executing work on behalf of the War Office was first raised as early as the year 1935. When this particular question of the manufacture of shells was raised on 10th July of last year there were various negotiations. There was the offer that was made to carry on contracts without profit, and I would like to make one comment on the reply which was sent by the right hon. Gentleman the Secretary of State for War to that letter. In his reply he said:
In view, however, of your expressed reluctance to undertake work of this nature I am unwilling to press you to accept a contract from my Department.
I am not attacking the right hon. Gentleman for his attitude. I can understand what was in his mind, but it might have been as well, when he got an offer of that kind, for him to have considered the interests of the taxpayers. I should have thought this was the kind of offer which any Government Department would be only too glad to accept.
A little later, negotiations were reopened and, as the right hon. Gentleman said, a tender was in fact submitted. An interview took place on 20th October between the managing director of the firm and a representative of the War Office. The managing director was given to understand that his tender was favourable and that a contract would follow in due course. I am not suggesting that a contract was actually entered into, but am stating what was certainly the impression left upon the managing director's mind after the interview. There was no suggestion then that any lower tender had been put in; a comment was made that it was favourable, as regards the price. The next letter to which I want to refer is from the War Office on 28th October. I do not think this letter was quoted by the right hon. Gentleman. It was the first indication received by the firm that no contract, as regards shells at any raise, was to come their way. The Department wrote saying:

It is not proposed to proceed with the proposal that you should undertake the manufacture of shells at this stage.
That was all. It was rather a curt letter and nothing whatever was said in the letter about a lower tender having been received. No reason was given in the letter, and naturally, after the negotiations which had gone on, the firm wanted to follow the matter up. They pressed for reasons, and they received a letter on 24th November in which the reasons given were these: Firstly, it was said that the War Office could get shells more economically elsewhere. That was the reason given at question time to-day. Secondly, that the factory of this firm was more suitable for heavier work, although no heavier work, as we have heard, was given to them. Thirdly, the vulnerability of the town of Ipswich.
I would like to ask questions to which I hope the right hon. Gentleman will be able to give me replies. What was the first moment of time when the War Office received a tender for shells acceptable to them at a lower price than that tendered by Messrs. Ransomes and Rapier? Have any tenders been actually accepted at the same, or at approximately the same, price which they offered?

Mr. Johnston: Or higher.

Mr. Foot: Yes, or higher. Before I leave this question, I would make further comment on the letter of 24th November. If it is correct that at all material times, particularly September and October, lower tenders were being offered, that was a perfectly good reason, of course, for turning down this firm. but what is the relevance of talking about the vulnerability of Ipswich?

Mr. Johnston: While the hon. Gentleman is on that point, perhaps he will let me interpose a question. If Ipswich is vulnerable for shells, why on earth is it not vulnerable for tanks?

Mr. Foot: I agree. It seems that views as to the vulnerability of East Coast towns vary from time to time. The first correspondence between the War Office and this firm was as early as 1935. The question of manufacturing shells was first considered in July, 1936. Negotiations had been going on for months and people had gone down from the War


Office to inspect the factory concerned. I visited the town of Ipswich very recently and, as far as I observed, it had not moved its position from 1936 to 1937. If the town was too vulnerable in November, 1936, for the manufacture of this form of shell or for the manufacture of tanks, why was not the same decision obtained in the month of July? In the intervening months this matter was being seriously considered by the War Office. If the War Office were going to turn the tender down because of the location of the factory, they might have thought of that in the first place before they put this firm to the trouble of inquiring into all these matters and preparing to carry out contracts on their behalf. Arising out of the point about vulnerability, may I ask where the contracts have actually gone? Are shells of this type being manufactured in London, and if so, is it the opinion of the War Office that London is less vulnerable to attack than Ipswich?
A separate matter to which I would like to refer was brought to my attention only to-day. It is the case of another firm, named Brookside Engineers, who have their factory at Westcliffe-on-Sea. Let me make it clear that this was not a firm which wished to deal on a no-profit basis. They were anxious to obtain orders for light engineering items, such as aeroplane parts, small shell caps and shell fittings. I would like to put before the House the history of their negotiations with the War Office. Negotiations between the firm and Supply Committee No. 1 of the Committee of Imperial Defence commenced on 21st March, 1936, and went on until 21st May. There were interviews and correspondence between the parties. A price was actually quoted in the month of May, I think, for supplying and machining a certain type of shell. On 21st May, the proprietor of this business was informed by letter from Supply Committee No. I that the correspondence was being passed on to the Director of Army Contracts and that it was expected that the proprietor would hear further from the Director. He did not hear anything further and, five weeks later, on 26th June, he wrote to Supply Committee No. 1 saying that he had heard nothing from the Director of Army Contracts.
On the same date he saw a representative of the Supply Committee, who confirmed that the price which he had offered was satisfactory and who sent him to the Contracts Department. He did not get very much further there. On 3rd July, he received a visit at his works from the same gentleman representing Supply Committee No. 1. That gentleman suggested that if he were to obtain a contract it would be desirable that he should make certain additions to his plant. Those additions were immediately put in hand and were carried out at an expense of £1,000, as I am informed. It was also suggested that the proprietor of the business should visit Woolwich Arsenal in order to acquaint himself with the methods of making shells of this kind. That visit was also made. The proprietor spent a considerable time there. On 21st September he wrote to the War Office notifying them that the additions which they had specified or suggested—I am not putting it higher than that—had been made. He heard nothing more for a period of some five weeks. On 29th October he went to the War Office, having received no information, and he saw the members of Supply Committee No. 1 with whom he had been in communication. They told him that they were sorry to say that no contract was to be given to his firm.
Rather remarkable delay appears to have taken place in this case. Firstly the matter is passed to the Director of Army Contracts and there is a delay of five weeks, from 21st May to 26th June. Then it is dealt with only because the gentleman concerned goes to the War Office. When he has completed all his preparations there is a further delay lasting from 21st September to 29th October. He hears nothing whatever from the War Office or from any other Department connected with Service contracts. There may be some good explanation, but to the lay mind there appears to be a lack of coordination between Supply Committee No. 1 and the Army Contracts Department. It is unfortunate that somebody should be allowed to engage in considerable expense and make additions to his plant and then, without being given any reason, be told that he is not to receive a contract.
I have raised these two cases. The second embodies rather different issues.


On the first, I hope a definite statement will be made because it is a matter which interests not only myself but many other hon. Members. Perhaps I might return again to the wider issues with which I started. The Government are embarking upon this great rearmament programme. If they are to have public support, outside the ranks of their ordinary supporters, they will have to satisfy public opinion that their programme is being carried out with as little inconvenience as possible to the industrialists who are co-operating with them, that it is being carried out without undue waste, friction or overlapping and, above all—on this point the public require to be fully satisfied—that every possible step is being taken to see that there shall be no profiteering out of the nation's necessities.

5.28 p.m.

Mr. Radford: I entirely agree with the hon. Member for Dundee (Mr. Foot) that the country wants its defences in proper order, but requires that there shall be no undue expense or profiteering on the part of anybody, whether employers or employed. I should like to make that clear for the benefit of hon. Members of the Opposition. The right hon. Gentleman who opened this Debate was very concerned about the money that had been made by coal owners in the Great War, but he did not mention the £10, £12 or more per week that was being picked up by the workers in the industry.

Mr. Johnston: I began by saying that the representatives of the working class at the outbreak of war—that is, the Trades Union Congress, the Executive Committee of the Labour party and the General Federation of Trade Unions—sent a deputation to the late Lord Oxford and declared that they were ready to enter into a truce to have no increases of wages during the national necessity if the capitalists would agree not to exploit the nation. That offer was refused, but wages were not raised until long after the cost of living had made that rise imperative.

Mr. Radford: I was very interested to hear the right hon. Gentleman make that statement. But I heard an exchange between him and an hon. Member on this side as to dates, and I rather gathered, from the dates that I heard given, that it was somewhere near the end of 1915 that the offer was made. The right hon.

Gentleman will remember that he quoted the OFFICIAL REPORT of November, 1915, or some such date.

Mr. Johnston: That was because the statement was repeated here in Debate by the late Sir Arthur Markham, and I thought that hon. Gentlemen opposite would be more inclined to believe Sir Arthur Markham than they would to believe me.

Mr. Radford: I do not think there is any difference between the right hon. Gentleman and myself. I think he was engaged in conversation at the moment when I began my speech; the only reference I made to labour was to say that all Members in every part of the House are opposed to the country paying too much for its rearmament programme; whether as a result of profiteering by contractors or as a result of unduly increased wages. I am sure the right hon. Gentleman will agree with me on that point. As to the case with which the hon. Member for Dundee has been dealing, I am not quite clear. Did the second firm he mentioned quote a price for the shells they were supplying and for which they received an order?

Mr. Foot: Yes.

Mr. Radford: I know nothing about the case, but they would probably be told, if they were not going to get an order, whether it was due to the price or to the unsatisfactory quantities they could deliver. I was very much interested in the discussion on the offer of Messrs. Ransomes and Rapier to supply shells at neither a profit nor a loss to themselves. The hon. Member for Dundee rather varied that later. He said that there was to be no profit, but he did not think they required to be indemnified in case of loss. I understand that this firm put in a quotation, and it is in question whether the quotation they put in was not the lowest at the time when it was put in, and whether it was not at some later date that a lower figure was quoted by another firm. But either the right hon. Gentleman the Member for West Stirling (Mr. Johnston) or the hon. Member for Dundee asked specifically that information should be given as to when the' lower tender was received. I want to submit to the House that there is no question of Messrs. Ransomes and Rapier having put in any tender at all. They


quoted a figure which no doubt was their honest estimate of what the price would be which they expected would leave them neither profit nor loss, but it is not in the power of the most efficient engineering concern in Britain to know precisely how much any job is going to cost them when they embark upon it, particularly when it is work to which they are not accustomed.
The House must not run away with the mistaken idea that an offer to supply an engineering product at neither a profit nor a loss to the firm making it is of necessity a cheap bargain for the country. It is my privilege to be associated with many eminent engineering experts, and I know the factors that enter into these matters. In the motor car industry, for example, there are certain manufacturing Companies at the present time who, owing to the lay-out of their plant and the very expensive plant they have installed, can turn out a certain car at £200 which another motor manufacturing firm, with good plant but without the same lay-out and the same labour-saving appliances, cannot turn out for less than £300. Therefore, it is entirely erroneous to think that it would of necessity be economical for the country to buy engineering products at cost price from one firm because another firm working with a good margin of profit can supply the Government with such products at less than the cost price of the first firm. The right hon. Gentleman referred to the special factories that the Government put up, soon after the beginning of the Great War, for making shells, and I understood him to say that the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) had said that those factories brought prices down by 40 per cent.

Mr. Johnston: I was quoting the saving on the metal. I said that the special department of the Ministry of Munitions had saved the country £15,000,000 on metal, amounting to a 40 per cent. saving on the price of shells, as a result of the establishment of the national factories.

Mr. Radford: I am not surprised to hear that, because at the outbreak of war the factories of those firms who made shells were only capable of the tiniest output, and a number of engineering concerns in the country endeavoured to rectify the shortage from which our forces were

suffering, by making something for which their factories were not laid out and to the making of which they were not accustomed. Obviously, therefore, apart from any question of profiteering, the cost would be out of all proportion to the costs in a factory specially laid out for shell making.

Mr. G. Hardie: Since the existing factories at that time were inefficient, and the nation put in plant that was efficient, does the hon. Gentleman mean to say that the country was justified in making good the loss incurred by those factories as compared with the national factories?

Mr. Radford: I have no idea what particular arrangements were made by the Ministry of Munitions at that time, and whether they still wished firms who were making shells at perhaps an expensive cost to continue in production, in order that the country might get the shells even though they were costing a higher price than those which were produced more economically in the Government factories. I only bring that in because the right hon. Gentleman seemed to think that the reduction of 40 per cent. was brought about by the establishment of these national shell producing factories at a time when there was blatant profiteering on the part of those who were already making shells. I am sure that the basis of his argument is unsound. I know that people making shells would be glad to get the best price they could, but the reason for the saving was that factories were put up which were specially designed and laid out for multiple production of shells, and it is multiple production that brings down the cost. The right hon. Gentleman himself said that the figure which Messrs. Ransomes and Rapier estimated would be the price. without profit or loss to themselves, was 17s. 11d., while the price at Woolwich was, I think, 27s. and some other firms quoted 3s. 7d. more than the 17s. 11d. estimated by Messrs. Ransomes and Rapier. It seems to me very probable that a corrected invoice would have had to come in, raising the 17s. 11d. to a good deal higher than 23s. 6d., without imputing any kind of dishonourable motive to Messrs. Ransomes and Rapier, seeing that it was work to which they were not accustomed.
There is another point which has not been raised in this Debate, but which


has been raised on various occasions to prove that there is profiteering by the regular armament firms. The right hon. Gentleman the Member for Hillsborough (Mr. A. V. Alexander), who, I see, has just returned to his place, will correct me if I am wrong, but I think I have heard him give examples of some well known armament firms whose shares have advanced during the last few months. Nothing could be more misleading than to say that it is proof of excessive profits because the shares of some company well known to the public were standing on the market at about 2s., and are now 15s., while their par value is only 5s. Hon. Members will recollect that during the dreadful times that intervened just after 1931, when the country had been at the mercy of hon. Members opposite, and in particular of the then Chancellor of the Exchequer, who entirely controlled their trade policy, the industries of iron and steel, shipbuilding, and armaments as well, were all in the very depths of depression. In the case of one company whose name I have heard the right hon. Gentleman quote in this connection, their shares used to be £1 shares, but they wrote them down so that every ordinary shareholder got a shillingsworth of ordinary shares for each £1 share that he held previously. That was the firm of Cammell Laird and Co., Limited. They wrote down their assets and their share capital by about £3,500,000. They wrote down their investment in the English Steel Corporation, which had taken over their armament and steel works, they wrote down their investments in the Metropolitan Carriage and Wagon Company and in the English Electric Company. Altogether they wrote £3,500,000 off their assets and £3,500,000 off their share capital, thus reducing the shares to the equivalent of 1s. each, and five of them were consolidated into a 5s. share. They stand now at somewhere about 15s. I heard the right hon. Gentleman point to the fact that 5s. shares were now standing at 15s. as a proof that the country realised, or at any rate thought, that the armament firms are now making pots of money—that they are profiteering—

Mr. A. V. Alexander: I must correct the hon. Member. I am not complaining at all about his line of approach, but he is not quoting me correctly. The firm to which I referred was that of Vickers, and

not Cammell Laird, and I pointed out that towards the end of the War period they increased their share capital, without any new subscription, by the issue of a bonus of 200 per cent., and that in writing down their share capital they merely wrote it down to the figure at which it stood before that bonus of 200 per cent. was issued. Their shares, the par value of which was 6s 8d., are now being quoted on the Stock Exchange at 54s., or 34s. higher than the unit value of the shares before the issue of the 200 per cent. bonus at the end of the arms profiteering of the War.

Mr. Radford: The right hon. Gentleman is now dealing with another company, but I do not think I am mistaken in saying that I have heard him quote Messrs. Cammell Laird—

Mr. Alexander: No.

Mr. Radford: I said at the beginning that no doubt if I was wrong the right hon. Gentleman would correct me, but the fact that a 5s. share is now standing at 15s. is no argument that profiteering is going on. Hon. Members pick out certain firms which have written down their capital in bad times to ridiculous levels, and say, if their shares rise to a higher value, that it is proof of profiteering. I am sure that the Government will not allow any profiteering, but will keep the closest watch on the costings of all firms who are manufacturing for them, unless there are other manufacturers who are making the same product, who are not in any ring, and whose quotations can be used as a check. But there are certain things, for example armour plate, as to which it would be inequitable merely to allow the bare cost of production plus a small percentage of profit, because the firms that own such plant, which is tremendously expensive, have had to keep it in working order ready for any national emergency over a period of 15 years, getting hardly a single order. It would be quite inequitable for the country to depend on private enterprise keeping plant and factories in existence ready to save the nation if an emergency came and then to say, "We will have the fruits of these people's patience and prevision," without giving them reasonable prices to cover the interim costs of their idle plant.

Mr. Alexander: I am sure the hon. Member does not want to mislead the House. Some of us have had experience of the fighting Services If he does not Know, he ought to know that, during the period when armaments were not being ordered to any great extent, subsidies were given to the firms to keep the armoured plate plant in existence. The hon. Member ought not to leave that out of account in presenting his argument.

Mr. Radford: I am glad to hear that it was done. If it was done and done equitably, my point does not arise, but I wished to put it forward because I am equally strong on fair play for the concerns involved and for the prevention of profiteering, whether by limited companies or individuals and whether it comes under the capitalist head or the labour head.

5.47 p.m.

The Secretary of State for War (Mr. Duff Cooper): It will probably be for the convenience of the House if I now reply to the one particular case which concerns the War Office and which has been raised by the right hon. Gentleman and also by the hon. Member for Dundee (Mr. Foot). In the first place, there is a grave divergence of statement between them. The right hon. Gentleman, with whose account of the case I do not quarrel in any way, said that the firm of Ransomes and Rapier proposed to undertake this contract on a no profit no loss basis. The hon. Member for Dundee says, on the contrary, that they were never claiming to be indemnified for loss. Does he really maintain that this was the proposition with which they came forward to the War Office: "We will lay down a plant for the manufacture of a line of goods which we have not manufactured since the War and, if we make any profit, we will return the whole of it to the War Office and, if we make any loss, we are prepared to bear it all ourselves?"

Mr. Foot: They quoted a price which they thought quite sufficient to cover them, and sufficient even to cover the cost of the additional buildings that they would need, so that they were quite certain that there would be some margin. They suggested that they should return that margin to the War Office. The War Office, I think, saw technical difficulties in the way. The firm then suggested that such margin as was left should be returned direct to the Treasury.

Mr. Cooper: The hon. Member has not dealt with the point. He says that if there was a profit it was to be returned to the War Office, but if there was a loss the firm would face it all. Of course they did not.

Mr. Johnston: Is it not the case that in the course of discussion it was suggested that they should put 10 per cent. on to their estimated price, that that 10 per cent. would adequately cover any possible chance of loss and that with this 10 per cent. they were prepared to bear the loss?

Mr. Cooper: No, that is contrary to my information. It was throughout on a profit and loss basis. I have not the business experience of my hon. Friend the Member for Rusholme (Mr. Radford), but I do not think that in business dealings one would look very favourably on a proposition which seems so much too good to be true. People come forward and say, "We will take all the loss and we will refuse to take any profit." The fact of the matter is that no contract was ever made, and no firm tender was put forward. It was an estimate. They estimated how much it would cost. At that time it happened that we were obtaining shell bodies slightly cheaper than that price, but we did not anticipate that we could obtain many more at that cheap price. In the opinion of my advisers the estimate the firm put forward was much too low and they felt convinced, with much more experience than the firm could possess, that it would cost much more than they anticipated.
Then the Director-General of Munitions Production visited the firm at Ipswich and discussed the matter with them. He did not understand that they were particularly anxious to take up this new line. They had made it abundantly clear in their original letter to me that they were not keen to do it. We were obtaining sufficient supplies from other parts of the country. He also saw the works of the firm in question and in his opinion those works were suitable for the construction of heavier material, such as tanks. He then went into details—there was some question of the date of delivery, and so on—and decided that it would be a mistake to employ this firm in this particular branch of manufacture, but at some future date it might be suitable if they could undertake the construction of tanks. That proposition is still


under consideration and has never been dismissed. When hon. Members ask why Ipswich is a dangerous place for the construction of shells but not for the construction of tanks, the answer is very simple. For the construction of shells it was necessary to set up new plant and, when you are setting up new plant, the question whether the locality is suitable for the plant is, naturally, of great importance. Other things being equal, you do not choose a place near the East Coast but, if the plant already exists, that is a strong argument in, favour of constructing them in that situation and the consideration of vulnerability diminishes. That is the short and simple answer why it did not play a large part in our considerations when it was a question of the construction of tanks on premises already existing and with plant at the disposal of the firm.

Mr. Johnston: Did I understand the right hon. Gentleman to say, on the question of tanks, that this firm were informed that their offer was not declined, but that the matter was still under consideration?

Mr. Cooper: Exactly.

Mr. Johnston: Is the right hon. Gentleman aware that the firm is in possession of a letter, which I have seen, declaring that there was no question of tanks being ordered now—that you were already well supplied?

Mr. Cooper: At the present time.

Mr. Johnston: Let us be quite clear about this. How can the matter be still under consideration if you have already advised the firm that you are supplied?

Mr. Cooper: There are no contracts going out for the construction of tanks at present. As I explained in introducing the Army Estimates, we are now awaiting plans and designs and the results of experiments with new tanks. When the question of issuing new contracts for new designs of tanks comes up, this firm will certainly be considered. As to the other case that the hon. Member raised, of which he gave me no notice—

Mr. Foot: I did not hear about it until to-day.

Mr. Cooper: I heard about it only a few minutes ago, so the hon. Member will not expect me to give him an answer, but I

am glad that he raised it, for this reason. It is an ordinary case and not a case of one of these firms who do not want to make profits. It is a case of an ordinary business firm which is out to make a reasonable profit. It shows that it is not only the non-profit firms which are unjustly treated, in the hon. Member's opinion, by the War Office. I should like to ask him and the right hon. Gentleman what they think is at the bottom of all this. When there is a crime there is always a motive. He spoke as if he wanted to get at the facts, as if there was something wrong going on. Does he suppose that the War Office really look with an unfriendly eye on a firm which does not want to make a profit? Does he really think that the extremely efficient civil servants—his right hon. Friend next him knows how efficient they are—would prefer to pay high rather than low prices? They have to present their account to the Public Accounts Committee. Does he imagine that they are not anxious to save money? What on earth does he suppose can have been the motive of the officials concerned if a mistake was made in this instance? Really, when hon. Members suggest that there is a crime it is up to them to suggest what is the motive for the crime. I will look into the other case that the hon. Member put forward. Cases of this sort are brought to my notice from time to time, just as often by our friends as by hon. Members opposite, which at first sight seem cases of gross injustice and incompetence on the part of the Department. But when I have looked into them I have not found one in which the Department was in any way to blame when the facts of the case have been accurately stated.

Mr. Foot: With regard to Messrs. Ransomes and Rapier, it was on 28th October that they were notified that the Department was not going to give them a contract for the manufacture of shells. There followed some correspondence, but it was not till 24th November that they were told either that shells could be got more economically elsewhere or that Ipswich was unsuitable. Why was it that those reasons were not forthcoming until 24th November?

Mr. Cooper: I have not all the papers in front of me but I cannot see that it is extremely material to the case. Obviously, when an estimate is not accepted by a


Government Department, the reason is that the Department does not think it in the interest of the country to accept it. Whether they need give the reasons for their decision to the firm is open to question. That there should be a slight delay of a month is not of much material importance.

Mr. Johnston: We are not accusing the right hon. Gentleman of any corrupt motive but, in view of the public concern that has been aroused by this case, and the possible consequences to the Treasury, in view of his own statement that this old-established and reputable firm, with a thousand employés, makes a specific offer to turn out shells at that price, which the right hon. Gentleman says his advisers told him was much too low, will he agree to lay a paper or, failing that, to have an inquiry. [Interruption.] A copy of the correspondence will serve. I have seen the correspondence. Other hon. Members and legal men have seen it.

Mr. Cooper: I am anxious to meet the right hon. Gentleman but I cannot understand why there is this tremendous public apprehension. He has brought up one case, and the hon. Member for Dundee (Mr. Foot) has brought up another, where some injustice seems to have been done. I can assure him that these cases are numerous. If we were to have a public inquiry and papers laid every time that even a real tender, not an estimate, were refused and turned down, and if hon. Members must be informed exactly what the alternative prices were, a great deal of public time and money would be wasted. I am sorry that I cannot give the right hon. Gentleman that promise. I am willing for him to come to the War Office at any time to see all the papers and to put them at his disposal, as there is nothing to conceal. He is aware that it would be contrary to practice to state exactly what is being paid. It would not be in the interests of the State that we should do that. To suggest that there is anything underhand or corrupt—

Mr. Johnston: No.

Mr. Cooper: Then what is the right hon. Gentleman suggesting? Simply an old-established firm of good repute has put forward an estimate which does not

commend itself to those who are best able to judge whether it is a good estimate, and, therefore, it has been turned down.

Mr. Johnston: We are not alleging corruption at all. We are alleging a very wide divergence of conception of the public interest. The right hon. Gentleman and his friends specifically stand for the right of private enterprise to make a profit. They honestly believe in it, and they fight for it. We, on the other hand, do not believe in it.

Mr. Radford: Will the right hon. Gentleman permit me—

Mr. Deputy-Speaker (Captain Bourne): I must remind hon. Members that we are not in Committee.

Mr. Johnston: There need be no unnecessary heat about the matter; it is a great question of public interest.

Mr. Deputy-Speaker: I allowed the right hon. Gentleman to ask a question. He has already exceeded his right to speak.

6.3 p.m.

Mr. Ellis Smith: It is proposed to spend during the next five years in this country approximately £1,500,000,000 on armaments. It was admitted the other day that at least £150,000,000 of that sum would go in direct profit, and it is in regard to that matter that I want to address the House. Twelve months ago I put a series of questions upon this subject to the Prime Minister, the Chancellor of the Exchequer, and other heads of State Departments. The following is typical of the questions I put:
To ask the Under-Secretary of State for Air whether he will consider the effect of the recent speculation in aircraft shares when asking for Estimates in the future?
The answer I received was:
The market valuation of aircraft companies' shares has no effect on contract prices."—[OFFICIAL REPORT, 4th March, 1936; col. 1370, Vol. 309.]
I ask the House whether there is any Member present who really believes that.

Sir Walter Smiles: Yes, I do. I think that the Stock Exchange has the most curious ideas of the value of shares.

Hon. Members: Hear, hear!

Mr. Smith: "Hear, hear," say several hon. Members, which indicates that they


are in complete agreement with that answer. I have before me a copy of the "Economist," dated 29th February, 1936, giving an analysis of the valuation of the shares of the main armament manufacturers of this country. I will give a few typical examples. The Fairey Aviation Company 10s. shares were quoted on 1st April, 1935, at 23s., in October of the same year they had increased to 26s., and in February, 1936, they had gone up to 37s. The Hawker Aircraft shares were quoted at 25s. in April, 1935, and at the present time they stand at 35s. Hawker Siddeley shares of 5s., which were quoted at 25s., at the present time stand at 35s. The Bristol Aeroplane Company shares of 10s. each were quoted on 1st July, 1935, at 57s. 6d., and at the present time they are 62s. One could go on giving instance after instance, showing the great increase in the prices quoted on the Stock Exchange. Hon. Members opposite said that they agreed with that answer. Let me examine how the speculation and increase in share values affect the public, and the working class, with whom I am mostly concerned. On the average, £100 invested in armament shares in 1932 is now worth approximately £500. Where has this increased value come from?

Sir Frank Sanderson: Is not the hon. Member aware that, when an aircraft company issues a 5s. share, it does not, in fact, offer that share at 5s., which is merely its nominal value? It offers the share to the public at prices varying from 20s. to 30s., and the capital of the company is the amount which the company receives for the 5s. shares.

Mr. Smith: The explanation given by the hon. Member is the usual explanation of financial editors who write in newspapers, which are determined to support this kind of policy and the policy of the Government.

Mr. Crossley: rose—

Mr. Deputy-Speaker: I really think that we shall get on better if hon. Members are allowed to make their own speeches, and then other hon. Members can answer them.

Mr. Smith: I want to repeat, in order that the House can follow the analysis and my interpretation of how this kind of thing affects the country, that £100 invested in armament shares in 1932 is

now worth approximately £500. I used to be employed in a section of industry which was being run as efficiently as possible. The hon. Member for Rusholme (Mr. Radford) in his speech indicated clearly that he is not familiar with modern methods of running industry. Had he been so, he would have known that in this country, particularly in the heavy industries, there are the most efficient methods of costing it is possible to put into operation. Some of the captains of industry are so concerned about the overhead cost of this efficient costing system, that they are very much afraid that they are getting their industries top-heavy under this system. They have been forced to embark upon this efficient costing system because of the keen competition with which they have had to contend during the last 10 years in particular. The result is that overhead charges are greater than these industries expected that they would have to bear.
In the industry with which I am familiar, and which was being run as efficiently as possible, a great financier, Dudley Docker, came along some time ago, and made an offer for the industry which was being run as efficiently as possible. Immediately he bought these shares their value on the Stock Exchange went up to a very great extent. This is my point of view with regard to how this kind of speculation affects industry. Dudley Docker purchases, say, shares that were standing at £100 for £500. Is he, therefore, going to be satisfied with the same return on the £500 that previously would have been paid on £100? Dudley Docker immediately goes into the workshops, and gets the directors around the board. Many of these men are as decent as any of us. They have had the responsibility of running the industry with the object of bringing about the best possible results. Dudley Docker takes the chair and all the specialists and managers of the different departments are lined up. Dudley Docker lays down the law that in future this particular industry will have to increase production to such an extent that it will enable him to get a return on the £100 shares for which he paid £500. That is the way it affects the employed in industry, and that is the way it will affect this country also.
I would be prepared to go upon any platform in this country, among any people, and, provided there were time,


I would be able to state the effect upon the people of this country of this kind of speculation which is now taking place, and I guarantee that, despite the political prejudice of people against me, most of the people would be prepared to accept the explanation which I should be able to give. How will it affect us in other ways? We are to be taxed for armaments. We on this side of the House are quite prepared to shoulder our responsibility for the defence of this country, if need be.
Time after time, in resolutions, manifestos and pamphlets, the movement of which this party is a section has stated that it is prepared to accept responsibility for the defence of this country. This reminds me of some of the experiences which some of us had during the last War. I shall never forget a speech which was made by the late Mr. Bonar Law, Member for one of the Glasgow Divisions. He played a great part in this House and in the running of the War. The time came when the country had great difficulty in raising loans, and in one of his speeches Mr. Bonar Law said:
Never let it be said that you willingly gave your sons and withheld your money.
At that time the casualties were mounting up and thousands of men were being killed and maimed. The Government were finding difficulty in financing the loans which they were launching because the financiers were holding out for the higher interest they knew they would get if they held out. The result was that Mr. Bonar Law had to make a big appeal to the country. He addressed meetings in order to rally public opinion behind the Government and to demand that the loans should be made. That is how we were affected during the last War, and we are being affected somewhat similarly at the present time.
These speculations affect the price of raw materials. The effect is shown in the rising costs of steel, pig-iron and many other materials required for the manufacture of armaments. The right hon. Member for West Stirling (Mr. Johnston) said that he did not blame the Government altogether for the speculation that is taking place in raw material throughout the world, but I charge the Government with having a certain amount of responsibility for the great speculation that is taking place in connection with

the country's need of raw materials for the armaments industry. The galling fact is that four years ago Germany was buying large supplies of raw materials from this country, such as nickel, petrol, wool, cotton and rubber. As a result of these bulk purchases by Germany the price of raw materials went up, and the speculators got busy on the Stock Exchange. Germany having purchased large amounts of raw materials from Britain, forced Britain to re-arm and we are having to purchase our raw materials at the enhanced prices caused by Britain being prepared to supply raw materials to Germany. It is a disgraceful business, and the people of this country will have to pay heavily for it. They will have to earn the enhanced value between the £100 share and the £500 share.
The Chairman of the Estimates Committee speaking recently, said that it was pure misrepresentation on the part of the newspapers to state certain things. Then he quoted from the "Daily Herald." I wish he had been in his place now, because I should like to point out that the "Daily Herald" is not the only newspaper that has said what he quoted. The "Manchester Guardian," the "Daily Express" the "Evening Standard" and many other newspapers have said it. I have here a copy of the "Evening Standard" which I got from the wastepaper basket in this House on the day the White Paper was issued. Here are the headlines: "Defence Loan"; "Armaments Shares." I am fairly observant, and I watched a certain number of hon. Members in the Reading Room to see to what page they turned when they opened the newspapers.
During the last War there was a great armaments king resident in this country, Sir Basil Zaharoff. This armaments king controlled the armaments industries in five countries and made millions of pounds out of this country during the last War, afterwards spending thousands of pounds on the Riviera. The Italians wanted Italian munitions, the British wanted British munitions, the French wanted French munitions and the Germans wanted German munitions, and Sir Basil Zaharoff arranged to supply them all. That is typical of the intrigue, the manoeuvring and control of these big armaments manufacturers, who have no claim to patriotism at all. It is the common people of this country who are the


real patriots. The armaments manufacturers are really internationalists and have no boundaries. They are prepared to manufacture for anyone at any time provided they can make a profit on what they are manufacturing. Sir Basil Zaharoff received from the Electric Boat Company, by acting as their agent, £13,000 in 1936, £6,000 in 1927, £18,000 in 1928, £7,000 in 1929, and £15,000 in 1930. I should like to know how many Sir Basil Zaharoffs there are carrying on in this country at the present time. Hon. and right hon. Members opposite claim to be great supporters of the Empire and want to do all they can in order that the great Empire of which this country is the centre can remain an instrument for peace and for the welfare of the people of the world. I would draw their attention to the report of the Estimates Committee, in which there appears the following statement:
Your Committee recommend an extension of the system of direct purchase of raw materials.
I hope the Minister for the Co-ordination of Defence will note that statement. Let me give the House a few interesting facts. A little off the North of Australia there are two fairly large islands, which contain the best and the most easily worked iron ore deposits in the world. They are composed of solid iron ore. The small States of Queensland and West Australia considered taking over those islands two years ago but they found that the proposition was too big for them, just as the problem of dealing with the floods at the present time is too big for the catchment boards. Just as it is the Government's responsibility to deal with the floods, so the two Australian States mentioned, considering that the proposition was too big for them, referred the question to the Government, being of opinion that it was a Government responsibility. The Government did not act, and a Japanese Company stepped in. Then the Government became concerned and took steps to prevent the Japanese Company from controlling the island, and a way out was found. British financiers from London financed a company, which enabled them to begin to exploit these islands. Now Japan is taking all the iron ore from those islands, and all the scrap from Australia, and there is great danger of several Australian steel works having to close

down because of the lack of iron ore and scrap in Australia.

Lord Apsley: I presume the hon. Member is referring to Yampi Sound.

Mr. Smith: That is so.

Lord Apsley: Does the hon. Member say that the Japanese are working the iron deposits there?

Mr. Smith: I thank the Noble Lord for interrupting me, because I do not want any misunderstanding. I want to deal with this matter clearly, so that the Minister and the Government will give attention to it. If we are to call again upon the Colonies and Dominions to support us in the way they supported us during the last War we shall have to give them much greater satisfaction in the future than during the past few years. What I said was that a London financial company had financed a company to exploit these iron-ore reserves, and as a result they are now mining these ores, which are going to Japan. If hon. Members have any doubt about the matter I may say that I received a report only this week from friends of mine in Australia, where they are so concerned about the question that it is being taken up by a number of State Governments. Public opinion is very much concerned about it. There is a great shortage of iron-ore in our own country. Several steel works in the West of Scotland and in the Special Areas in particular are held up because they cannot obtain supplies of iron-ore, and some are held up for lack of capital because it has not been a business proposition to sink capital in those companies because-of the operation of the cartel. The time has arrived when, in accordance with the recommendation of the Estimates Committee, we should embark upon a large-scale policy of obtaining our raw materials from the Dominions and Colonies in order that this country can supply itself with all the necessary raw materials at as small a cost as possible.

6.28 p.m.

Mr. Assheton: I had not intended to, intervene in the Debate, and I hope the House will excuse me if my remarks are somewhat disjointed, but I felt that one or two points made by the hon. Member opposite called for a certain amount of criticism. He seems to be under the


impression that the price of shares in a company has some relation to the price of the product which the company sells. I do not know whether he has ever taken the trouble to look at the price of the stocks of the various railway companies. If so, he will observe that the stock of the Great Western Railway Company, which is paying a dividend, is standing higher than the stock of the London and North Eastern Railway Company which, unfortunately, on its junior stocks is not paying a dividend. Nevertheless, it costs just the same per mile to travel from here to Newcastle as to travel from here to Bath.

Mr. Alexander: Parliamentary fare.

Mr. Assheton: Yes I agree, a Parliamentary fare. Then may I give another example? If the hon. Member gets a cup of tea at Messrs. Lyons he will pay no more than if he went to the A.B.C. Messrs. Lyons is a very efficiently managed concern, whose shares stand at about £6 and they pay 22½ per cent. dividend. Their management compares more favourably than the A.B.C. who pay only 5 per cent. Nevertheless, the price of the products which they sell is no higher. Therefore, I do not think it is possible to prove anything from the fact that a company is paying a high rate of dividend or that its shares are standing at a high level. It has to compete for orders in the markets of the world or of the country, and it can only succeed by selling its goods at prices which compete with those of the goods sold by other companies.

Mr. Alexander: The record of the iron and steel industry in this country between 1919 and 1921, when they were trying to sell their goods in the world market at a price which would give a return on their enormously inflated share capital, was very largely responsible for the slump that came, and the disastrous period that followed.

Mr. Assheton: I would not deny that, but I do not think it has any bearing on the argument I was putting.

Mr. Alexander: The hon. Member does not want it to have any bearing on it.

Mr. Assheton: I would like to refer to the case of Ransomes and Rapier, which

was mentioned by the right hon. Gentleman the Member for West Stirling (Mr. Johnston), who I am sorry is not here at the moment. I appreciate very much a great many of the gallant attempts which he makes in the House and elsewhere to attack share-pushing, and I hope hon. Members on all sides of the House will assist him. On this particular occasion, however, I think the right hon. Gentleman is really barking up the wrung tree. The firm of Ransomes and Rapier is a very admirable firm which manufacture sluices and other products. It approached the Government apparently, and suggested that it might make shells. There is absolutely no reason for supposing that, because a firm is ready to make shells for the Government and to make no profit out of them, that is a good bit of business for the Government to undertake. It might well be that one firm could produce shells at 20s. and make a loss, and another firm produce them at 15s. and make a very handsome profit. I believe the whole argument on which the right hon. Gentleman the Member for West Stirling and the hon. Member for Dundee (Mr. Foot) made their case was based on a fallacy. The fallacy was that because a firm goes to the Government and says it is going to make no profit on a contract, therefore the price which that firm proposes to charge is the right price. Nothing of the kind. Prices do not depend on the cost of production.
The hon. Member for North Aberdeen (Mr. Garro Jones), speaking the other day about the price of copper, said that the production cost was £25 a ton. I draw his attention to the fact that the price of producing copper varies enormously from one part of the world to another. It is possible to produce copper in the new mines in Rhodesia infinitely cheaper than it is possible to produce it anywhere in America. A company producing copper in Rhodesia might be paying a large dividend, whereas another company producing copper elswhere might be making a loss, and the company in Rhodesia might still be able to sell its copper cheaper than the other company. The cost of production bears no relation to prices, and prices are governed by the law of supply and demand.
I would like to say a few words about the prices to which shares in armaments


firms have risen. I am not for one moment going to commend speculation in armament shares or in any other shares, but I think it is only fair to point out that a great many of these concerns which are now being enabled to make good profits and to pay good dividends have, for a great many years, been making no profits and paying no dividends. The fact that Vickers' shares are standing at 34s.—which I think was the figure quoted by an hon. Member—must be considered in conjunction with the fact that only five years ago the same shares were standing at 5s. As long as there is a capitalist system, one must expect to have profits and losses. When losses are being made and when the producer is in the unfortunate position of being at the mercy of the consumer, hon. Members opposite do not grumble, but when the opposite situation obtains and there comes a time when profits become more easy to make and losses less easy to make, then naturally shares rise and profits are made.
The capitalist system, if I may be allowed to say so, is a system which certainly makes it possible for the community to get some sort of idea as to what is the right price to pay for goods. An hon. Member opposite spoke about Government factories being some guide as to the cost of production, and he proceeded to quote the fact that at Woolwich shells were being produced at 9s. 1d. more expensively than they would have been produced according to Ransome and Rapier's price. That is an argument which shows that costs at the Government factories are not really a very reliable guide as to what the right costs ought to be. I think we are very fortunate in having in this country a capitalist system which enables the Government to obtain a better idea of what the right price should be.

6.37 p.m.

Mr. Garro Jones: I shall not detain the House for very long, since I gave my views in general on this question in a recent speech in the House; but there are two matters of vital importance which I wish to bring to the attention of the Minister. We have just heard a statement about speculation from the hon. Member for Rushcliffe (Mr. Assheton), who, I believe, is a stockbroker, and another one from the hon. Member for Stoke (Mr. E. Smith), who, I believe,

is a pattern-maker. I must say that I prefer the version of speculation of the pattern-maker to that of the stockbroker. I believe the hon. Member for Rushcliffe, who was speaking about false analogies, made a gross false analogy himself when he tried to compare the customer buying a cup of tea with the shareholder buying a share—

Mr. Assheton: That was not the analogy that I was trying to draw. I was trying to show that because the shares of one armaments firm might be standing at several times their par value, that was no indication that the prices which the firm was charging to His Majesty's Government were any higher than the prices being charged by some other firm which was perhaps not even able to make a profit.

Mr. Garro Jones: The position when the shares of the firm stand at much above par value, however they have reached that position, is that there is a tremendous drive on the directors of the firm to maintain that inflated standard of earnings. That was the point so clearly made by the hon. Member for Stoke. The burden of our charge against the Government is that they do nothing in connection with this speculation in shares. We know precisely what happens. If a firm charges only a little too much, an extra 10 per cent.—which I believe in the armaments world is looked upon as a small additional earning—that increases the capital value of its shareholding by 100 per cent., and that means that it is making 110 per cent. additional money—

Mr. Assheton: indicated dissent.

Mr. Garro Jones: The hon. Member does not agree. If I have £100 of shares in an armaments firm and I am getting 10 per cent. on them, if the earnings increase to 20 per cent. and my holding increases to £200 in value, and if I sell my shares on the Stock Exchange, then I am making zoo per cent. capital appreciation and 10 per cent. on my revenue. That is what is being done to-day in armaments shares. What happens, in two or three years' time, is that the new shareholder who has the shares is left with shares which he has bought at 100 per cent. capital appreciation, the annual meeting is held, times are more difficult, the pressure brought upon the board of


directors is almost irresistible and the result is that there is a drive upon labour, upon reducing costs and increasing prices to the public. It is a most pernicious system which allows that to take place.

Mr. Assheton: If that were the case, surely Messrs. J. Lyons and Company would now be charging twice as much for their cup of tea as the Aerated Bread Company.

Mr. Garro Jones: Those firms do not operate on the same basis as the armaments firms. I will tell the hon. Member why. I do not want here to give a testimonial to J. Lyons and Company, but I will give credit where it is due. They have built up their service to the public on the basis that their prices are lower than the retail prices of articles elsewhere, and if an article at J. Lyons and Company is shown by their accountants to make more than a certain percentage of gross profit, the price to the public of that article is immediately lowered. That is not happening in the case of armaments firms.

Mr. Remer: Is the hon. Member aware that as a rule increased profits are not from increased profits on the articles, but very largely from an increased turnover?

Mr. Garro Jones: But if the increased turnover is caused by the Government fulfilling a national need, I say it ought not to be used to increase the profits of armaments manufacturers. Moreover, efficient though the firm of Lyons may be, I would like to see its attitude towards its employés overhauled. I would like now to refer to the firm of Ransomes and Rapier. Here we come right to the root of the question of armaments profits. The Secretary of State for War asked what was the charge against the Government; what were we suggesting was the motive of the Government in not allowing that firm to make armaments without a profit? I will formulate the charge in perfectly frank terms. I accuse the Government specifically of declining to accept this offer to make armaments without profit because of the embarrassment it would cause to all other private manufacturers of armaments. The precedent would be awkward. It is of no use the Minister for the Coordination of Defence or other hon. Members smiling for they know that to be true.
What have the Government done to appeal to the patriotism of armaments manufacturers? Have they asked them to make armaments without profits? We know what is possible in that way. Only a few years ago the country, supposed to be in a dire crisis, wanted to convert enormous amounts of its War loan. There was a tremendous blast of patriotic propaganda in all the newspapers for the purpose of persuading people to convert their War loan at a sacrifice of income. The Government succeeded in doing that. What attempt has the Minister made to appeal to the patriotism of armaments manufacturers to follow the example of Ransome and Rapier and to make armaments without profits? I venture to say that the Government will never make that appeal, for the reason I have stated, that they do not wish to cause embarrassment to those of the armaments manufacturers who desire to make excessive profits.
The Secretary of State said that the fact that an armaments firm was prepared to make armaments without a profit did not of itself mean that the Government would get those armaments at an economic price. That is true. No one suggests that the Government should allow anybody willing to make armaments without profit to make them; all we say is that if they are willing to make armaments without profits and the price is an economic and competitive one, they should be allowed to do so. I can assure hon. Members that in the case of Ransomes and Rapier the price was an economic price. The price at which they offered to make these shells was 17s. 11d. I have seen the whole correspondence, and their offer was a firm offer to make shells at that price, without any recourse at all in respect of losses. That was the price fixed after they had shouldered the risk of losses, and I challenge the Secretary of State for War to deny it. I have seen the papers only to-day. I have discussed the question with responsible directors of the firm, and, as I say, they quoted a firm price of 17s. 11d. for shells, without recourse beyond that amount to the War Office, if their costs proved higher than they estimated.

Mr. Cooper: That is contrary to the information which I received, and contrary to the statement made by the right hon. Gentleman who opened this Debate.

Mr. Garro Jones: I assure the right hon. Gentleman that he must have misunderstood what my right hon. Friend said, because I myself was able to place in my right hon. Friend's hands, just before he made his speech, a statement to the effect that the figure which I have mentioned was without recourse, and that information I received on the highest authority. Moreover, 17s. 11d. was much below the prices which you were actually paying for shells at that time. I know that you had offers, in one or two cases, to make shells at prices a little lower but you were paying more than 17s. 11d. for shells at that time. You declined this offer and it is evident through the whole correspondence that you became uneasy and suspicious about this possible precedent, and put off this firm on one excuse after another. First it was the vulnerability of the site, then it was that they could make tanks easier than shells, then the price and so on. I charge the Government specifically with having put this firm off because they wanted to prevent embarrassment to other manufacturing firms.
There is another point, and that is the secrecy which surrounds all these questions of armament manufacture. Why should not we be told the prices which are being paid for shells, guns, bombs, petrol and other materials? What is the use of pretending that it is not in the public interest to give us that information. The Government know very well that that information is on the desk of every contractor, every morning. The steel-makers have it, the shell-makers have it, the aircraft makers have it. The only people not to have that information are the Members of this House whose business it is to protect the taxpayer against having to pay too much. Only the other day a question was put to the Air Ministry asking how much they paid for petrol, and the answer was that it would not be in the public interest to give the information. But the Admiralty gives such information, and when a trade paper wrote to the Air Ministry a few weeks later asking for the information, it got it.
The Government are taking refuge behind this practice of secrecy, in order to conceal from the House matters which this House might criticise. I have put down a question to be asked to-morrow, requesting the Prime Minister to state the

principles upon which the Government refuse information regarding the prices paid for armaments. We know that in almost every sphere armament contractors are hand-in-glove with each other and know the prices at which they are going to tender. Out of 41 tenders for steel, 40 were of exactly the same amount. I make an appeal to the Government, because I can assure them that if they fail—and they are failing—in the measures they are taking to protect the country against profiteering in armaments, there will be short shrift for the Ministers who are found responsible and the Government which is found responsible. There is yet time to grapple with this problem but the only way to do so is by taking this industry under public control. That alone will save them from the wrath of the people when the true facts are known.

6.51 p.m.

Mr. Crossley: The hon. Member for North Aberdeen (Mr. Garro Jones) had four points in his speech. He started by attacking my hon. Friend the Member for Rushcliffe (Mr. Assheton) for exposing the fundamental fallacy into which the hon. Member for Stoke (Mr. E. Smith) had fallen in confusing speculation in shares on the Stock Exchange with the prices of the products of our manufacturers. I wish to have this point made clear, because I am certain that hon. Members on this side of the House feel just as strongly as hon. Members opposite about it. The whole country feels intensely on this point and everyone is anxious that there shall never again be profiteering in armaments, comparable with what happened in the last War, and that this armament programme shall be carried out at fair prices, and not more than fair prices. But I cannot see that people who take the risk of buying materials at the prices which these firms have to pay—many of them only partly engaged on Government contracts, and very largely engaged on large civil contracts as well—should not receive a fair return. The actual price at which aeroplanes, for instance, are sold must depend on such factors as he cost of labour, the cost of raw materials and other costs of that description, and those who have taken the risk to which I refer are entitled to a reasonable profit.
The hon. Member's second point was, what had the Government done to appeal


to the patriotism of armament manufacturers and induce them to make armaments without profit? I doubt whether the Government at the present time would make any complaint of the patriotism of the armament manufacturers. I do not say whether the motive is patriotism or not, but I do assert that most of the armament manufacturers in this country, most of whom are civil firms and many of whom are putting themselves to considerable inconvenience to make armaments, are serving a patriotic end. What the Government have done is something different from what the hon. Member suggests. The Government have said: "We shall go most carefully into the cost of all the articles that you produce and that we demand, and we shall see that you do not make more than a reasonable profit on those articles." I do not think that is an unreasonable attitude on the part of the Government. It appears to me to satisfy the general demand of the country that a reasonable profit should be allowed to a firm which, when all is said and done, without a reasonable profit could not hope in the future to meet periods of bad trade.

Mr. Alexander: Will the hon. Member tell us his idea of a reasonable profit? I understand he has experience in engineering.

Mr. Crossley: I assure the right hon. Gentleman that I have no connection whatever with any kind of engineering, but, generally speaking, I would suggest that 5, 6 or 7 per cent. would be, on the whole, a reasonable profit.

Mr. Alexander: On capital or turnover?

Mr. Crossley: On capital. If the right hon. Gentleman looks into the experiences of most engineering firms since the War he will find, I imagine, that very few of them made a profit of any kind over a period of 10 years, and that many of them went out of action. I should imagine that the main cause of the rise in the shares of many of these companies is not the fact that they are making unreasonable profits, but the fact that for the first time for many years their turnover is satisfactory. The hon. Member for North Aberdeen then went on to refer to the firm of Messrs. Ransomes and Rapier and the price of 17s. 11d. per

shell. But the hon. Member is only trying to fight a rearguard action on this question—and he is awfully good at that —because the Secretary of State for War has replied to every point raised in that connection. Surely the first interest of the Government in its armament programme is to have suitable factories in suitable places. If this factory is not suitable, if new construction is necessary before shells can be manufactured, as I understood from the reply of the Secretary of State for War, then surely it is not unreasonable to say, "We propose to hold this factory in reserve for the manufacture of heavier war materials when we desire them later on." It strikes me as a matter of public policy, and nothing else. As regards the competitive prices of these shells and the shells from other firms and from Woolwich Arsenal, I am not qualified to give an opinion.
The last point which the hon. Member for North Aberdeen raised was that the House should have control over this expenditure. Surely the means by which the House exercises control over public expenditure is that provided by the Estimates Committee and the Public Accounts Committee. I am not an expert on Procedure, but I have always understood that both those Committees can at any time call for any papers concerning any subject of Government expenditure, that they are composed of Members of all parties and that they are able to look into all these questions. I also understand that on this very question there was a unanimous opinion in the Estimates Committee that the Government had selected the right way of controlling prices in connection with the armament expenditure.

Mr. Garro Jones: The report of the Estimates Committee contains about eight positive recommendations of steps which they say the Government must take in order to make their supervision effective, and therefore they cannot have intended to congratulate the Government on having done so already.

Mr. Crossley: I definitely understood from the speech of my hon. Friend the Member for Harrow (Sir I. Salmon) that the report of the Estimates Committee contained a general approval of the means by which the Government intend to control expenditure, but if they have,


as the hon. Gentleman says, made several other recommendations, that only shows that the control of this House is more effective than the hon. Gentleman would have us believe.

6.57 p.m.

Sir W. Smiles: My experience of the question of contracts of this kind goes back to the Boer War period. I can remember my father talking at home about the difficulty which his firm then experienced in getting on to the War Office list, and I believe that a new firm still has great difficulty in getting on to that list. I have, therefore, some sympathy with Messrs. Ransomes and Rapier, who, apparently, have been going through exactly the same experience as that which my father's firm went through about the year 1899. An hon. Member opposite referred to the value of shares upon the Stock Exchange in relation to the price of the articles produced. My experience is that the value of shares on the Stock Exchange has no relation to the profits of a firm or to the cost of the production of the commodity in question.
I would ask hon. Members to look up the financial papers of two years ago and observe the price at which rubber shares then stood. They were almost being given away. They are 10 or 12 times the price to-day at which they then stood, and I do not suppose anyone would impute to the people concerned that they have pushed up the price of rubber because of armaments or war. Not only rubber shares but other shares as well have jumped in the same way, and anybody who thinks that prices on the Stock Exchange are a reliable guide in the buying of shares is liable to have his fingers severely burned. An hon. Member opposite mentioned the case of the iron and steel industry in 1919 and 1920. I would ask hon. Members also to look up the prices of the shares of iron and steel firms in 1919, 1920 and 1921 and compare those prices with the prices at which they stood 10 years later, in 1931.
The directors who control these vast engineering industries are not all supermen. Some of them make tremendous mistakes. Marshalls, of Gainsborough, established a huge engineering works in Calcutta on which they spent more than £500,000, and it hardly ever turned a wheel. There was another firm, Combe,

Barbour and Combe, a big amalgamation of tube machinery people, and they also established a huge works. The shares jumped from 10 rupees to 18 rupees, but afterwards they could not be given away for two annas. The advantage of the capitalist system is that when there is a slump the shareholders have to pay, and when there is any profit the Government take one quarter of it. That is the great safeguard of the taxpayers in this country, and everyone of us wishes that we could go into business on the same principle. I ask the Secretary of State to cast his eye over the correspondence relating to new firms who want to get on the War Office List. I dare say there is a great deal of heartburning in the matter, and there may be efficient, young firms who, because of some want of influence or the inability to send the right sort of letter, never seem to be able to get a Government contract.

7.3 p.m.

Sir T. Inskip: I have few observations to make, because I was able to make some general observations on profiteering in relation to armaments on Monday. Everybody shares to the full the opinion of the right hon. Member for West Stirling (Mr. Johnston) in their dislike of any idea that excessive profits are to be made out of the rearmament programme of the Government. I have used the word "excessive" because it is only fair to recognise that hon. Gentlemen opposite would prefer to see a complete system of nationalisation, a world in which they dream it would be possible to eliminate profits and the incentive to profits. I should have thought that the experience of recent years had gone to show that that dream is likely to remain a dream as long as human nature is what it is.
Assuming that nationalisation of the armament industry is not possible, then we must give private industry a fair rate of profit, and that was the conclusion which the Royal Commission reached. I do not suppose the party opposite, if they predicate, as I do, the existence of private industry, would suggest that it can be carried on without a fair rate of profit. Therefore, the question is, what is a fair rate of profit? The White Paper issued a year ago was clear on this matter. I need only remind the House of paragraphs 57 and 58, in which it was stated that His Majesty's Government had given


a great deal of time and thought to this matter, and that, while they realised it was important to retain the good will of industry, the Government were determined to set their mind to every possible plan for preventing higher prices than were justified. The question must immediately arise whether the Government published these expressions of intention in good faith or not. I gathered from one speech a few moments ago that anything the Government do or say is regarded as not being in good faith, but I am not sure that view would find acceptance even in the ranks opposite.
Assuming the view to be that the Government are sincere in what they have said is their intention, the question is whether the methods they have adopted so far are satisfactory. The right hon. Member for Stirling recognised that the Government have taken some steps which, so far as they go, are satisfactory. That admission is very welcome, and none the less welcome because it could not fairly have been withheld. The Government have taken a good many steps. If I may give an illustration which is familiar to the House already, from speeches by the Chancellor of the Exchequer and from answers to questions asked of myself and of other Ministers, the Government have determined that no rate of profit in the shape of a percentage On the volume of orders shall be allowed to contractors. In other words, they are to be given a rate of profit which is to be determined after exact estimation of the costs, including oncosts, having relation to the capital employed, having relation to the turnover—that is important—and having relation also to the volume of the order and the likelihood of a repetition of the same order.
These are all considerations which may properly govern the determination of a fair rate of profit. I am not thinking only of the upward rise in profits when I speak of a fair rate, I am thinking of the downward movement also. When you consider all these factors properly and reasonably you are likely to arrive—as far as the human mind ever can arrive at the answer to a rather vague and difficult question of this sort—at a fair rate of profit. The question now arises whether the Government, with all their good intentions, have taken to themselves

the assistance necessary to do what is very difficult. The right hon. Gentleman rightly said that, however much you may desire to ascertain oncosts, there are 100 dodges for getting round them. I do not think anybody is more familiar with the dodges than the able and experienced accountants whom the Government are now employing in large numbers in the various departments. I wonder who it is that we ought to employ to prevent contractors from making unreasonable profit? I know only two classes of people who can be trusted to carry out this duty—one, the people experienced in the various branches of industry, and the other, Government servants who are selected with the well-known impartiality that governs the appointment of civil servants.
I do not know anybody else who could do this work. Either you must call in the outsider from industry, and set a thief to catch a thief, as hon. Members opposite would put it, or employ your own gamekeeper, your civil servant. The first expedient has been ruled out by the right hon. Member for Hillsborough (Mr. Alexander), because on 24th February, 1936, when this rearmament programme was in contemplation, he asked the Prime Minister whether he would
take care, in order to retain public confidence, not to give way to pressure to put in charge of this kind of work, industrial magnates who have profited much in the past from subsidies of the Government?"[OFFICIAL REPORT, 24th February, 1936; col. 31, Vol. 309.]
In other words, do not let any of these rascals who have made excessive profits come in and manage it for you; manage your business yourself, without assistance.

Mr. Alexander: But you are retaining just that type of person.

Sir T. Inskip: No, indeed we are not. Does anybody suggest that Sir Hardman Lever, Mr. Judd or Mr. Ashley Cooper have ever made profits out of the Government's programme? I should be surprised to hear that a distinguished civil servant like Sir Hardman Lever has ever made a profit out of the Government's programme.

Mr. Alexander: I said you are retaining as your advisers on the programme people who come in that class of person.

Sir T. Inskip: Yes, we are retaining advisers on the programme, but now I


am dealing with the question of costs. If the right hon. Gentleman is agreed that it is undesirable to bring in what I call the industrial magnates to put out these contracts and arrange the terms, the only other persons that the Government can use are the civil servants. We have reinforced, as I said on Monday, the staffs of each of the Service Departments with as competent and experienced men as we could possibly get. Is there any hon. Member opposite who would say we have been wrong in taking those steps? I am sure that hon. Gentlemen, who are so sincerely anxious to prevent profiteering, would applaud what the Government have done in that respect. I agree that these gentlemen have to be very much on the qui vive to discover these dodges. The right hon. Member for Stirling said that one of the most frequent expedients for getting round the rules likely to be imposed is the practice of writing down unduly the capital Value of assets. Does the right hon. Gentleman really think that these costings accountants, who are brought up and trained in the special branch of their profession, are not fully alive to that? I have it in these papers before me as one of the matters which, of course, they would observe.
It may be that, being human, they might overlook particular cases, but it is no good saying that the Government are not taking the best steps they can to prevent undue profiteering. I fully accept what has been said by one hon. Gentleman, that if the Government turn out in the end to have failed it will go hardly with the Government and with Ministers concerned. I am perfectly prepared to accept that responsibility, and I should not be so foolish as to be making these observations if I knew well that when the veil was lifted I should be found to be a rogue and vagabond, as the hon. Member for North Aberdeen (Mr. Garro Jones) charged the Government with being. He makes such extravagant charges that I think even his own colleagues regret the extreme lengths to which he goes in charging corruption. I am not going to mention the case of Ransomes and Rapier because it has been dealt with by the Secretary of State for War.

Mr. Johnston: What is the right hon. Gentleman's own view about that?

Sir T. Inskip: I am bound to say that the case my right hon. Friend made was unanswerable, given the fact, which he assured the House is the fact, that there was no undertaking to bear any loss that might accrue in the execution of the contract. That, the House will see, is critical. If Ransomes and Rapier quoted the price of 17s. 11d., and were prepared to return any profit realised on the transaction, it was, of course, a firm tender, but I thought the whole hypothesis was that there was no firm tender.

Mr. Johnston: That is absolutely denied.

Sir T. Inskip: I know hon. Members deny it, but I know nothing about the case except what the Secretary of State has stated.

Mr. Johnston: Would the right hon. Gentleman, as Minister for the Co-ordination of Defence, go so far as personally to inquire into that point, and if he is satisfied that this firm did make a firm offer and was prepared to bear the loss, including the 10 per cent. increase, will he be prepared to see that the whole matter is ruthlessly inquired into?

Mr. MacLaren: May I assure the right hon. Gentleman that it was a firm offer? I have seen the documents.

Sir T. Inskip: I have referred to my right hon. Friend the Secretary of State for War, and I have said that my knowledge of the facts is limited to what I heard him say, but I thought my right hon. Friend made a very fair offer when he said to the right hon. Member for West Stirling that if he would be good enough to take the trouble to go to the War Office, he should have the whole of the documents in the War Office relating to this matter laid out for his examination.

Mr. Johnston: But we have seen them.

Sir T. Inskip: Perhaps the right hon. Gentleman did not see everything. It is possible in this world that the right hon. Gentleman may not have seen everything, even though he may have been told in good faith by somebody that he has seen everything. I think it is a fair offer that the right hon. Gentleman should go to the War Office, and if it would give him any greater pleasure or satisfaction, I will go with him.

Mr. Johnston: I accept that offer.

Sir T. Inskip: Very well. If the right hon. Gentleman and I go together, I will look at the documents while he looks at them, and this difference on a question of fact can be disposed of. If there are any other considerations, no doubt they will be discovered in the course of the examination. The right hon. Gentleman will not expect me to go with him to the War Office this side of Easter. I hope this particular case can be disposed of in that way, but I wanted just to say one word about the line which the right hon. Gentleman took in quoting, as another sample of his hypothesis that the Government are allowing excessive profits to be made, a recent prospectus of the amalgamation of several firms for the production of machine tools. I know nothing about the firms, except that two or three of them are known to me by name, as they are to him—firms of the highest repute. What they did, I gathered from the statement made, was to issue 4s. shares at 5s., and some hon. Members seem to have assumed that there was, somewhere or other, an illicit profit of 1s. per share. I am sure the right hon. Gentleman does not think that, but some of the speeches that are made seem to suggest that when a company issues a shares at 30s., in some way or other it is getting 10s. more than it ought to get. Of course, that is a complete fallacy. The right hon. Member for Hillsborough, I think, was a member of the Committee that considered the recent Companies Bill upstairs, at great length. There we considered, three or four years ago, a proposal to abolish the statement of any par value of shares as having no importance at all, because the importance of having a share in a company is to know that you own 1,000,000, or 1,000, or 100 shares, so as to get your proportionate rate upon the profits that are made. The fact that a company calls it a £1 share or a 4s. share does not matter at all. If a company gets 5s. for what is called a 4s. share, it is getting 5s. of capital which the company takes and uses in its business.
So far as speculation on the Stock Exchange is concerned, the Stock Exchange may be well advised or not, but when the right hon. Gentleman quotes half a dozen aeroplane firms, and mentions Handley-Page declaring something

like 264 per cent. dividend, I would remind him that these profits have absolutely nothing to do with the Government's armament programme. I only wish I thought they had, because that would show that so much work had been done in producing aeroplanes for the Government's rearmament programme that my right hon. Friend the Member for Epping (Mr. Churchill) would not sometimes have to make the speeches which he does as to the slowness of the execution of that programme. I know nothing about the Handley Page Company. I am not even fortunate enough to have a share in it, but I understand that the company has an enormous trade in civil aeroplanes and that a very valuable invention is associated with that company. The fact that these profits have been made in the past year seems to me to prove a thesis contrary to that put forward by the right hon. Gentleman, namely, that armament firms, some of which may now be engaged in making aeroplanes for the Government, have other resources or that they make considerable profits from their ordinary trade outside the Government's rearmament programme, because when the years which have been closed, in respect of which these dividends have been declared, were passing, the Government's programme had only to an infinitesimal amount come into the picture. Next year may show a different picture, and then, no doubt, it will be possible to use any profits made as an argument.
I think the House must accept, if I may respectfully say so the statement which the Government have made so often—and I will not repeat what I said on Monday—that questions connected with the control of raw materials and world prices are worth consideration. My hon. Friend the Parliamentary Secretary to the Board of Trade will no doubt speak with greater authority than I can on those questions, but I think the right hon. Gentleman was right in admitting that where an article has a world price, you cannot expect the Government to restrict that price by artificial measures. It is true that the Government might in theory buy an enormous quantity forward, not only for their own requirements in the ordnance factories, but also for the people who are their contractors or sub-contractors, but I should be very slow indeed in thinking that any Government which took that course would be


right. It may be that it requires further consideration now, but I am not sure whether this is quite the time. But I hope and trust that speculators will have one or two bumps which will enable more reasonable prices to be quoted in the markets for these articles.
Hon. and right hon. Members opposite cannot get over the fact that in many of these raw materials and commodities there is a world shortage. They may regret it as much as I do, or even much more than I do, if that is possible, but they cannot get over the fact. If we were a home-producing country with all these corn-modifies, we could control prices, but there it is. We have to take, unfortunately, the consequences of a world revival in this respect, and much higher prices are being charged. I repeat the assurance which I gave on Monday, that the Government believe that they are taking all possible steps to carry out the promise which they gave to the House in the White Paper 12 months ago.

Mr. Alexander: I am anxious that we should go on with the Debate, and I do not want the Minister for the Co-ordination of Defence to leave before we have finished what we have to say about armaments. It may be inconvenient, when we are dealing with the kind of topic which has been the subject of this Debate, if we are not to have the advantage of a subsequent reply from either the Minister himself or somebody else who can speak directly with regard to the expenditure required by the fighting Departments.

Sir T. Inskip: In answer to the right hon. Gentleman, I have, of course, to make engagements, and I have one made for to-night which I must, if I can, keep. It is in connection with my duties, and I had proposed that my hon. Friend the Parliamentary Secretary to the Board of Trade, who knows all about these commodity prices and similar questions, would answer for me, and that the House would then acquit me of any discourtesy in leaving at this stage.

Mr. Foot: May I put a point to the right hon. Gentleman before he goes? As he knows, this question of the control of profiteering by Government Departments was dealt with by the Royal Commission on Armaments, which made a most emphatic recommendation that a special body should deal with this matter among

other matters. Are the Government yet in a position to say what their attitude is towards that recommendation?

Sir T. Inskip: That is another question, and, as I said on Monday, any question as to any announcement of the Government's decision on the Royal Commission's report should be addressed to the Prime Minister.

Mr. Alexander: We are in a difficult position. We are not in Committee, but speaking in full House, and we want to interrogate the Minister.

Sir T. Inskip: But the right hon. Gentleman, I am afraid, cannot, under the Rules of the House, interrogate me. I cannot myself speak a second time, except with the permission of the House, but I do not think it is anything unusual, in a Debate of this sort, when we are not in Committee, to allow another Minister to make the second speech.

Mr. Alexander: Our complaint is that there are four Defence Ministers, and the Parliamentary Secretary to the Board of Trade is not one of them.

Mr. Speaker: It is true that the House is not in Committee and that the Minister cannot speak again except by leave of the House, a leave which is sometimes too readily given. If such leave is not given, some other Minister must be deputed to reply.

7.28 p.m.

Mr. Alexander: Perhaps it will be convenient if I start to say what I have to say now in regard to some of these matters, so as to enable the right hon. Gentleman the Minister for the Co-ordination of Defence to get away for his appointment. In any case, if I might open what I have to say to-night with regard to the last point that he dealt with in his speech, namely, the question of forward buying, we can get no answer from the Parliamentary Secretary to the Board of Trade with regard to the Defence Departments and their forward buying. Certainly it is no defence of the Government's position simply to refer to speculation and to the very severe handicap to our Defence programme of the rising prices of basic commodities and to say that we do not happen to produce those commodities here.
We do not take that kind of answer when we think of tin. Here is the Secretary of State for Air. First of all, he was at the Board of Trade, and then, when he got out of office, he became chairman of a great tin combine. Then he got back into office, became Secretary of State for the Colonies, and arranged an agreement for the restricting of the output of this exceedingly valuable metal. Then you come to a position where you get the Government up against it. They are supposed to be in the extremity of need in regard to armaments, and we are told that the speculation in this article is caused by a shortage, a lack of world supplies. Yet one of the important Defence Ministers was chairman of a tin combine, and then, when in office, he helped to put through the agreement which restricts output. What is the good of giving us that kind of excuse for the rise in price of one of the most important things required in the armaments programme?

It being half-past Seven of the Clock, and there being Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS under Standing Order No. 6, further Proceeding was postponed without Question put.

GREAT WESTERN RAILWAY BILL. (By Order.)

Order for Third Reading read.

Motion made, and Question proposed, "That the Bill be now read the Third time."

7.30 p.m.

Lord Apsley: The reason this Bill is under discussion before the House is that a number of hon. Members, including myself, objected to it the other day. The reasons why we objected are not in order in a discussion on the Third Reading, for they have nothing to do with the Bill itself. They can be found in a speech given on the Air Estimates by the hon. Member for Stroud (Mr. Perkins). There is, however, a matter which is incorporated in the Bill about which I should like to raise a question. It concerns more the Report stage, and it was for that reason, among others, that I also objected when the Bill came up on that stage. The question I want to raise comes under Clause 5, which deals with the

No. 1 Railway which is to be built 27 chains west of Denham and is to go for some miles into the urban district of Uxbridge. I would like to ask the promoters of the Bill whether a station will be built on this railway to serve Northholt aerodrome which is adjacent to it, and, if not, whether any arrangement will be made to serve Northolt or Heston aerodromes. The question has been raised on many occasions by the Air Committee of feeding aerodromes direct by railway to central London. It is becoming more and more evident that road transport is impossible and is becoming worse every year. We were informed by the Air Ministry on one occasion that the Great Western Railway were considering under the 1936 Act extending the No. 1 Railway to Heston aerodrome. I should be glad to know if that extension is to take place. We were assured many years ago that it was to be made, but I can see no preparations for any work being started. If it is not to be made, will the railway mentioned in this Bill be an alternative so that there will be a station for Northholt aerodrome which will make it within easy reach of the centre of London, and whether in that case any negotiations will be entered into with the Air Ministry with a view to the transfer of the service squadrons now stationed at Northolt to Croydon, which I understand is to be abandoned as a civil airport in favour of Swanley. We would thus be provided with two good airports, one to the East and one to the West of London, connected by electric trains, to the centre of the metropolis.

7.35 p.m.

Sir Robert Horne: I am Chairman of the railway company promoting this Bill, and in order that I could give an accurate answer my Noble Friend might in all courtesy have apprised me of the questions he was going to ask. I have had no notice of them, and I could have been in a position to furnish accurate information if I had been apprised of them. I am not in a position to give a reply with confidence, but I would venture to give this reply, that the railway company have been very anxious to promote air services in every possible way. I think it was the first railway to adopt air services. As to the matter which my Noble Friend raised I have a distinct recollection—I am not entitled to go further with regard to the information I would


otherwise have desired to convey to the House—of certain approaches which were made to the Great Western Railway by the Government in this matter. With regard to that we have furnished plans, and the matter has remained there.

Lord Apsley: I apologise to my right hon. Friend. I would have given notice of my question, but I rather understood that the whole matter had been gone very carefully into on the Private Bill Committee.

7.37 p.m.

The Deputy-Chairman of Ways and Means (Captain Bourne): I was Chairman of the Committee before which this Bill came. The Great Western Railway made out a perfectly good case for the line to which the Noble Lord has referred, but it did not have any reference to any question connected with aerodromes. The Committee were satisfied on the case that the railway made out that this new line should be sanctioned. The main purpose of this Bill is to provide for a deviation of the main line from Newton Abbot to Exeter. It may be remembered that last year the Great Western Railway promoted a Bill to alter their main line in South Devon which was liable to be interrupted during the south-westerly gales by the breakdown of the sea defences. After they made their plans a gale broke down the sea defences at the mouth of the Exe some miles further east of the original plan. After that experience they came to the conclusion that it would be better to take the line further inland, and the main purpose of this Bill is to abandon part of the original plan and to make a substituted line for it. Anybody who has travelled in that part of the world will realise that this is a very desirable alteration, and I suggest to the House that in the absence of any very strong ground it would be very unfair to the railway company, and undesirable in the public interest, not to give the Third Reading to this Bill.

Question put, and agreed to.

Bill read the Third time, and passed.

CONSOLIDATED FUND (No. 2) BILL.

Postponed Proceeding resumed on Question, "That the Bill be now read the Third time."

7.38 p.m.

Mr. Alexander: We are able to resume the discussion with regard to prices and the Government check upon the danger that we feel exists of charging far too much money to the taxpayer in respect of the armaments programme. We have had a good deal of discussion as to what should or should not be regarded as a reasonable rate of profit. There seems to be no key or direction with regard to what is reasonable profit. The Minister for the Co-ordination of Defence, who has now left, said that it would have regard to the actual capital employed, the actual amount of turnover, and the actual volume of orders and the prospect of further orders, but we have had no indication from the Government as to the standard to which the experts who are supposed to check the costings of the various Service Departments have to work. In regard to the programme upon which we have now entered, which we are told is to cost £1,500,000,000 in five years, that is a sorry condition in which to leave the situation. We have had arguments from the other benches that we are not right in charging capitalists with being unpatriotic when dealing with armaments. It is said that there will not be undue profiteering but only reasonable rates of profit, but there has been no attempt on the part of the Government, either in the reply of the Secretary of State for War or in the reply of the Minister for the Co-ordination of Defence, to answer that charge.
The fact is, whether the Members who support the Government like it or not, that the existence of the Government's armaments programme is definitely leading to exploitation in prices, to increasing profits by armament firms, and, because of this, to inflation in the prices of other commodities in other spheres besides the armaments sphere. I got from the City this afternoon the correct total profits in the last three years of ten firms who are engaged in the armaments business. The firms are John Brown, Thorneycrofts, Birmingham Small Arms, Hadfields, Vickers, Handley Page, Rolls Royce, Dorman Long, United Steel, and Hawker Aircraft. That is a fair sample of firms dealing in armaments and affected directly by the Government's programme. For the year 1933–34 their total profits amounted to 1,250,000. For 1934–35 they amounted to £2,258.000.


For 1935–36, the first year in which there was a real effect of the beginning of the armaments programme, the profits amounted to £3,049,000, an increase in the case of these firms in two years of 190 per cent. That is an enormous rate of development as a consequence of the Government's armament programme. It really does not do for Members on the other side to say that the actual prices on the Stock Exchange are no indication of the profits which are being made. We are well aware that at times people who gamble on the Stock Exchange get their fingers badly burned if they are not in possession of inside information and are liable to be caught as a bull or a bear whichever way they are operating. If you take the average of the prices which companies reach during the period of 12 months, that is a fair assessment on which those who are supposed to know what is the real value of an investment in a particular company can judge what work is being done and what profits are made.

Lieut.-Colonel C. Kerr: There is one thing the right hon. Gentleman might bear in mind. A great many prices to-day are based very much on the rate of money. Many shares have come on to a basis of 4 per cent. because of the value of money. Government securities have got on to a very low rate of interest. At one time they were down almost to 3 per cent., and in all shares which pay dividends you will get a natural rise in prices and a consequently lower rate of interest to the shareholders. That must be considered in dealing with this matter.

Mr. Alexander: I do not want to rule out any natural phenomenon. It is well known that if there is a current high price for a gilt-edged security, there is a tendency for it to affect industrial securities. I am afraid that does not answer my point. Take the position over the last three years since the value of money and gilt-edged securities has changed. We point to the fact that over those three years we see large increases in the aggregate profits of the armament firms, and we see an appraisement of those profits clearly indicated in the prices paid upon the Stock Exchange for their shares, and because of the length of time over which those Stock Exchange prices have endured it is within the

bounds of legitimate argument to quote Stock Exchange prices as an indication of the extent to which profiteering is taking place.
It does not do to get up and say, if the price of a share is five or six times its par value, that that fact has no relation to the price of the commodities. Take the flotation of the Bristol Aeroplane Company, when shares were issued at much more than the par value. On the other hand we may have, as in the case of Vickers, which I quoted earlier in an interruption, the value of the shares written down to 6s. 8d. and then see them rise upon the Stock Exchange from 6s. 8d. to 34s. That quotation has been maintained for a considerable time and gives the market's appraisement of the rate of profit being made. We have had no answer from the other side to the general case which was submitted by my right hon. Friend the Member for West Stirling (Mr. Johnston) and was supported by other speakers on this side of the House.
Although the Minister for the Coordination of Defence was very severe upon my hon. Friend the Member for North Aberdeen (Mr. Garro Jones), nevertheless we are far from being satisfied about the case of Ransomes and Rapier, which was put before the House. I am grateful to the Minister for having made an arrangement with the hon. Member for West Stirling to go into that question when they have an opportunity after Easter, but until after that meeting has taken place and the facts are disclosed in the House of Commons the public are surely entitled to have a very grave suspicion about the situation. It is all very well for some resentment to be expresed at the language of my hon. Friend the Member for North Aberdeen, but we are entitled to point out that the previous statements of Ministers have hardly indicated that they were really anxious to adopt a basis of production without profit for their programme of armaments. I remember the speech of the Chancellor of the Exchequer on 4th March, in which he said:
When it is suggested that we ought to take all profit out of the supply of materials, I wonder how hon. Members think they are going to have any armaments made at all, because unless we are going completely to alter our social and industrial system and conscript everyone in industry we cannot turn


out armaments."—[OFFICIAL REPORT, 4th March, 1937; col. 677, Vol. 321.]
That is, perhaps, the best measure of the patriotism of those who are potential producers of armaments that we have ever had given to the House. Nothing could be said by any hon. Member on our side of the House which would be more damning of those who, we say, are guilty of making undue profits out of armaments than the Chancellor's own statement that unless there is a profit in the business we cannot get armaments. If that is the Chancellor's view, and if he is telling the House that the Government cannot possibly consider the adoption of a basis under which all profits can be taken out of production, I think my hon. Friends are entitled to say to those who are responsible for the Ransornes and Rapier incident that we suspect them. Instead of taking the offer for what it was worth and trying it out to see what could be done, it was ruled out at once. It was as though the Government said, "If we once have it proved that it can be done without a profit we shall be doing a serious injury to all the other firms with whom we have made contracts and with whom we are likely to make contracts." Therefore, until my right hon. Friend the Member for West Stirling has reported to the House further, after he has had his conference with the Minister for the Co-ordination of Defence, we shall continue in our suspicions that all is not well in this connection.
The hon. Baronet the Member for Harrow (Sir I. Salmon) addressed the House earlier in the day as chairman of the Estimates Committee, I gather, and referred to the report of that Committee and suggested that members of the Labour party who were members of the Committee had acquiesced in the general proposition that the steps at present being taken by the various Service Departments for checking costs are adequate and likely to be effective, subject to further considerations. To start with, as I understand it the matters brought before the Estimates Committee are concerned as a rule with past expenditure—it may have been recent expenditure but it is past expenditure—and I suppose that very secret documents may be laid before the Committee, but we have no indication yet of the actual system which is adopted under the check referred to by the Estimates Committee.
What interested me most of all was the manner in which the case was submitted by the hon. Baronet. He endeavoured to show that there was nothing inconsistent in the capitalist retaining his profit-making system and having a public and patriotic interest in his country. Yesterday I sat with the hon. Baronet in a Government Committee upstairs. It is a Committee of which I have been a member for 13 years and it is our duty to check, as far as we can, in the public interest, the prices of building materials. Yesterday the hon. Baronet, in his capacity as Chairman of that Committee, and I and other members, signed a draft of a report which was entirely contrary in principle to the arguments he used this afternoon, and I could not understand why he should have put up his defence of the capitalist, his patriotism and lack of desire to exploit the public, after his experiences with me upon that Committee yesterday.
It is a great pity that in Debates of this character Members so often leave after addressing the House and do not come back, because it means that one has to make charges or answer charges in the absence of a Member whom one would have liked to be present. I should like to say a word about the illustrations which the hon. Baronet put forward and which brought my right hon. Friend the Member for West Stirling to his feet. It was a reference to the adequacy or otherwise of the check which the late John Wheatley tried to put upon building prices in 1924. In view of the hon. Baronet's statement it is just as well that the facts should be recorded. I was deputy-chairman of a committee set up in 1923 and went on until early in 1924, which submitted a report to the House of Commons, under my signature, to say that there was in existence such price rings, trusts, combines and trade associations as made all effective check inadequate.
We recommended legislation, but at that time the Labour Government was supported by only 191 Members out of 617, so there was little chance of getting legislation on the subject. However, the Minister of Health and the Secretary of State for Scotland at that time, in their endeavour to prevent undue profiteering, got an agreement from the employers and the operatives in the building trade to the effect that however much the volume of


house building expanded the ruling prices should be taken at least as a guide—not necessarily to be a permanent fixture but to be a guide, something upon which comparisons could be based in the future. In the later months of 1924 the late John Wheatley introduced a Bill which was designed, deliberately designed, to take over whenever it was necessary—in the interests of the people at large and of the housing amenities in particular—the brick-fields and other branches of production in the building industry, in order that we should not be unduly exploited at any time by the agreement he had entered into. Therefore it seems to me that the argument put up by the hon. Baronet was entirely beside the mark.
There is another point. We are not at all satisfied with the explanation given to us about rising prices. It was said that wherever possible competitive tenders were obtained. I have in my office a whole volume of the reports which were issued as a result of the inquiries conducted under the Profiteering Acts in the years 1918 to 1921. Even as far back as 1921 the existence of price-fixing associations and close combines in the industries now engaged upon the armaments programme was proved. For example, there was a combine dealing with brass wire, brass 10ds, rolling mills, white lead, tin and iron and steel. Of course, some of these combines have been very much tightened up and developed since those days. As I go down this list of 60-odd combines existing in 1921 I find that there is not a single section of the armaments industry, from zinc to spelter, from iron and steel to chemicals, from textiles to tinfoil, which is not the subject of the most complete trade-association control, with the elimination as far as possible of any really competitive tenders.
I should like next to refer to iron and steel. In the business with which I am familiar we have over and over again in the last two years had experience of asking for tenders for iron and steel—steel of the kind used for the erection of buildings—and when we have asked for nine tenders we have got nine exactly identical results, even down to the last penny a ton. Therefore, to say that you can in these matters get any effective check by competitive tender is just nonsense. Nor am I satisfied that it is sufficient to leave it entirely to the basis on

which the Costings Department works. I recognise exactly what the Minister for the Co-ordination of Defence meant when he referred to the high standard of the Civil Service. Those who work with the members of the Civil Service from time to time know how high their ideals are and how conscientiously they do their work, but it does not always mean that that is the last word on the matter. I have a memory of some occasions when I was at the Admiralty when my hon. Friend the Member for North Camberwell (Mr. Ammon) was able to suggest new and direct methods of approach other than the usual costings for the negotiation of a settlement of a price or a final account. I think we ought to be satisfied that we are not merely sticking to the old and set methods of costings accountancy in order to settle what should be the ultimate price. On that I think we ought to have a very direct answer from the Government.
We are very much concerned about the general increase in the prices of basic metals, due to the speculation which has followed the announcement of the armaments programme, because of its serious effect on other industries. The Government have said all through, "We could never get what we want on the basis of private profit, and we should interfere as little as possible with other commercial industries." The hon. Member for Kingswinford (Mr. A. Henderson) the other day put a question to a Member of the Government with regard to the price of copper and similar basic metals. He is, of course, very much concerned about the serious effect upon employment in the Midlands caused by the grave shortage and high prices of the metals which are now to be used in carrying out the armaments programme. I think that if the Parliamentary Secretary to the Board of Trade is going to reply, we ought to get at least some information to explain how these extraordinary increases in the price of the base metals is to be accounted for. I do not need to go back a long distance, but take copper, which was quoted on 20th February, 1936, at £35 17s. 6d., but which had risen by firth February, 1937, to £56, and by 18th March, 1937, to 174 10s. That is an extraordinary price. Take tin, which my right hon. Friend has already referred to; it has risen from £209 in


February, 1936, to £300 10s. on 18th March, 1937. Spelter has increased from £15 13s. last year to £34 to-day, and touched as high a figure as £37 on 11th March. Take lead. You get the same phenomenal increase there, and this is so serious for industry as a whole, quite apart from the question whether we are not paying far too much on our armaments programme, that I cannot understand the general complacency of the Government about it. When I think of the way metals are going up and of the cost of a battleship, of a destroyer or of a cruiser, I can see that instead of a naval programme which in ordinary times would cost us £50,000,000, you may easily have in 12 months an increase of 15 or 20 per cent., because of these movements in prices.
But it is not only that, it is also the general effect upon all the other people who are in business dealing with these metals. I have been making some inquiries to-day as to the prospects in various industries. It is true—and I think it is always a mistake to put a case too high—that up to the present there has not been any very substantial increase outside the armament industries, but there is every indication now, from inquiries I have made on the market to-day, that there are going to be general increases all round as a result of the Government's policy—partly owing to their manner of dealing with it, and partly from the higher level of prices created by speculation.
I was looking at a number of examples to-day. Compared with 12 months ago there has been a rise in tea of 2d. a pound. An hon. Member who spoke just now would, I think, have been able to deal more authoritatively with the subject of tea than with almost any other subject. It is a pity he did not speak upon it, but I do not think he will deny that tea is up at present 2d. a pound on last year's price. The price of coal for the domestic consumer, as compared with last year, is up 2s. a ton. There is a 17½ per cent. increase in the price of blankets, and a 10½ per cent. increase in the price of flannels. There is a rise varying between 5 and 10 per cent. in the price of hardware, 7½ per cent. in that of linoleum, and from 5 to 10 per cent. in that of electrical appliances. With regard to the furniture trade, that has had a very good run for

the last few years and, owing to very large demands in connection with the housing programme, was able to reduce the relative cost of production to a considerable extent, but now there is an increase of anything between 5 and 6½ per cent. in prices in the last few months. Then you find a great increase in the cost of food. We have seen a considerable rise in the last 12 months in the price of flour though that, of course, has not been entirely due to this cause. Thirteen shillings a sack is the amount in the last 12 months. Cheese is up about 15s. a cwt., lard 7s. a cwt., New Zealand butter £1 a cwt., oats have risen from 13s. 9d. to 18s. and oatmeal from 12s. 2d. to 16s. 9d. Bran and middlings are up about 25 per cent. on the price of last year.
Apparently the whole policy of the Government in relation to the finance of the armaments programme, owing to the lack of control over the rise in prices in the armaments sphere, is leading to a general advance of prices all round which is going to be a very serious thing indeed for the working people of this country. I know that the Parliamentary Secretary will say, in reply to that, that the world has been looking for an increase in prices as its hope of salvation, but an increase in prices which is induced, if not wholly, at least to a large extent, by heavy borrowing, will not help in that direction. We are stimulating that rise in prices by borrowing on the public credit to the extent of £400,000,000, and when we on this side of the House challenge the Government's methods we get the answer from the right hon. Gentleman the Member for Hillhead (Sir R. Home)—who has been in the House again to-day because there was something on in which he was interested —"We can take the £400,000,000 in our stride." But when we ask for a comparatively small sum to help in the relief of unemployment in the Special Areas or for the revival of industry in those areas it is difficult to get £2,000,000. Yet we are embarking now on a policy of raising prices all round, which means in effect a wage cut in the case of all our wage earners until such time as they can, with great labour and the full use of their trade union machinery, get an increase of wages to overtake the increase of prices. But there will be no such relief for the unemployed man, for the pensioner, or for those who have fixed standards which


leave them hardly a subsistence level, if that.
Therefore, we say that the whole policy of the Government on these matters ought to be revised. If you cannot effectively check profiteering in these huge developments of production in the sphere of armaments, believe me profiteering will spread to all the other parts of industry in this country, in which it is already bad enough, and with dire effects on the population as a whole. I hope that before the evening is out we shall have some better idea from the Government, first as to what is going to be done to prevent undue profit-making by capitalists engaged in the manufacture of armaments, and secondly, as to steps which it proposes to take to prevent the exploitation of the consumer in general.

8.13 p.m.

Mr. David Adams: The speech to which we have just listened has brought the House back to the fact that we are living in a capitalist age and that this is the doyen, among capitalist Governments, and I think that the evidence which has been submitted from this side of the House, and not effectively challenged from the other side, indicates that in the plans of the Government there is no such thing as an intention to restrict speculation and profit-making. The fact is that a study of the Government's legislation during its effective reign has indicated that its first, second, and third consideration is the careful preservation of the existing capitalist system and, wherever possible, the expansion of the same. The Government have gone out of their way to secure this end. We saw that tendency in the Special Areas Reconstruction Association, when £1,000,000 required for the Special Areas was not handled as it ought to have been by the Treasury. A private profit-making concern was deliberately set up by the Treasury and richly endowed. For a period of 10 years it is to receive not less than £250,000 for administering £1,000,000, in addition to a guarantee that 25 per cent. of any losses would be borne by the Government. That is an admirable illustration of the determination of the Government to extend and recreate Capitalism wherever possible.
We saw the same principle at work when subsidies were granted. This party

will not oppose subsidies as such but subsidies should be granted as loans and not as unrestricted gifts. Friends of mine have been good enough to advise me that the action of the Government in making grants to certain industries in which they were engaged had preserved and protected them against financial misfortune in a normal way. There was thus the creation of another oasis of Capitalism. The same thing is seen in the new site-finding company set up under the new Special Areas Bill which is to come before the House. One would imagine that to find sites would be the duty of local authorities, or of the industrial boards set up by them for the purpose of dealing with unemployment due to the slowing up and diminution of industry in various parts of the country, but the Government do not use that method. They strike the original idea that the persons to find the factory site shall be bodies specially set up by the Government, and to be financed by the Government either by loan of by a gift of 25 per cent. of their capital. I have never heard anything more original than that notion of sweeping aside the local authorities and the industrial boards and creating a new type of company which, although it may be restricted as to dividends, is nevertheless a profit-making concern.
The same attitude is adopted largely and consistently in the armaments boom which is in full swing. The whole policy of the Government, from the first intention of rearming the nation, has been to permit the maximum of profit. The Government gave an invitation to speculators to prepare for the golden age. They did not anticipate in any way or attempt to restrict the possibilities of wild speculation and of great profit-making in rearmament. As the previous speaker has pointed out, that policy is having a most serious effect in forcing up prices. I see that the Parliamentary Secretary shakes his head.

Dr. Burgin: The hon. Member is always most observant. I was shaking my head at the suggestion that the previous speaker had pointed out the connection between the armaments programme and the rise in prices, whereas he quoted a number of rises in prices and talked at length about the armaments programme, but showed no connection between the one and the other.

Mr. Adams: I cannot understand that statement. Loud speakers throughout the country indicated to all and sundry that an opportunity for unrestricted speculation was at hand, but no action has been taken by the Government to protect the interests of the tax-payer. In 1922 I was in New York, where I was introduced to the deputy-chief of police. There had been a raid for the purpose of discovering intoxicants, as it was during the period of Prohibition, but remarkably little was discovered by the police—I think only a bottle of champagne, and one or two persons indulging. I was astounded, I said to the official, at the paucity of the haul, but he replied: "Mr. Adams, in this country we do things differently from the way you do them. When we are about to make a raid we let them know beforehand." That is the attitude which the Government take consistently. The taxpayer in due course will have to pay.
The Government's lack of control is affecting the normal industry of the country. Last week the chairman of the directors of Messrs. Swan, Hunter and Wigham Richardson quoted, at the annual meeting, the Minister for Coordination of Defence, who, at Newcastle a day or two previously, at a meeting of the North-East Coast Institute of Shipbuilders and Engineers had given injunction to shipbuilders. "Go abroad for Orders." Mr. Christie said that that was all very well, but how were they to execute those orders under present conditions? He said, also, that the steel makers were putting up their prices and that higher prices were to come. I had been unable to ascertain what the subsequent figures are to be. The orders, Mr. Christie said, which they booked 12 months ago showed a dead loss, and it might be that orders booked in recent months would also show no profit. While record steel profits have been made, as declared by the English Steel Corporation on 27th February far in excess of last year's profits, at the same time they are permitted to exploit the general body of consumers—I hope I use the correct term inoffensively—they are permitted to extort the maximum figure. Exactly the same difficulty in regard to the conduct of normal business is being evinced in the export trades throughout the country, namely, that their contracts have been drawn up, where contractors could draw them up, on the

basis of higher figures, in almost every direction.
The Press has been warning the country of the situation, and one or two extracts are certainly entertaining. They are dated the 18th instant. One paper stating that tin last week jumped in one day £17 10s. a ton—a ten years' record —to £300. Lead and zinc soared. Copper, which cost £25 to £30 per ton, is now between £75 and £80 per ton. It was also stated that, because of the boom in armaments, metals are yielding fortunes to the bigger dealers, and the commodity markets have shown the fiercest scramble since hectic 1914. Another paper of that date observed that the scramble for metals and commodities was one of the greatest ramps ever staged. I am not prepared to use the term "ramp," because it is part and parcel of the capitalist system, which says that, if you take the maximum profit that you can while the going is good, you are acting in strict harmony with the admirable system under which we live at the present time.
I need scarcely quote more figures to show that the country is labouring, both in regard to armaments and in regard to private production, under neglect by the Government, as a result of which the rearmament programme will probably cost the country from 20 to 25 per cent. more than it should have done. Moreover, the local authorities throughout the country are going to be burdened with dearer house-building and dearer building of every description for their normal expansion. This week I put a question to the Minister for the Co-ordination of Defence, because I felt that even at this late hour some of our misfortunes might possibly be retrieved. I asked him whether, in view of the fact that the Government are probably the largest single purchaser in the country, employing trained personnel to do their buying without the intervention of intermediaries, he would extend this practice to the purchase and distribution of all raw materials required for the rearmament programme. My complaint is not as to the prices which are being charged at the present moment; my complaint is that the raw materials have not been purchased in advance, as they could have been, and, indeed, as they were during the last six months of the War.
As we know, there was State control then. Purchasers imported raw material in bulk from producing countries—I am quoting from the official records—at the lowest prices obtainable, where possible by contract for the requisite number of years ahead. Large quantities of metals, non-ferrous metals particularly, were purchased by the Government at an early date in the War, and control was deliberately set up. The goods were bought at the source; profits were limited at intermediate stages, up to the finished article in many cases; manufacturers received for their whole output their conversion costs and a moderate profit, while distributing merchants were remunerated as Government agents at reasonable rates of commission. By this means prices were restricted in those times to a reasonable maximum figure, largely based upon costs. That is perhaps too fanciful an idea for the Government in a period when we are rearming, but this is in effect an expenditure equal to that of a small war. 1,500,000,000 is to be spent on rearmament, and many more millions on the normal expansion and industrial development of the country, and therefore I contend that the Government's action has been most inadequate in regard to preserving and protecting the interests of the country, even under the capitalist system itself. They could have permitted our manufacturers and others to obtain what they were entitled to obtain, namely, proper margins of profit, and by handing out raw materials on proper terms and making the requisite contracts, as was done during the War, many millions of pounds could have been saved to the State.
We recollect that the Australian wool clip was purchased in 1916 under a five years' contract. There was no difficulty in doing that. Australian meat was bought by the Board of Trade in 1914 at 4½d. a pound, and that price continued, up to the end of the War. There were purchases from the Dominions, from Crown Colonies and from foreign countries under conditions which protected the general interests of the State. From the speech of the Minister this afternoon I felt somehow that in the future the Government might step in and protect in some measure the consumers and taxpayers of this country, and my plea is that they should now, without

further delay, extend the practice which is followed by the War Office, the Admiralty, the India Office, the Crown Agents for the Colonies, the Office of Works and other Departments, which are staffed by trained personnel. I appeal to the Government to use that personnel, to extend that practice, to go straight to the source, to buy direct without intermediaries and eliminate useless middlemen who at the present moment are exploiting the country. If this were done, we should call a halt to the inflation which is going on. I think the Parliamentary Secretary will not deny that inflation is in active process at the present moment. It could be avoided, or reduced to much smaller proportions, if we had State control, coupled, of course, with proper measures of taxation.
May I say a word with regard to the great controversy of the firm of Messrs. Ransomes and Rapier? I have been making what inquiries I could, and the information that I have obtained—I hope it does not slander anyone—leads me to a different conclusion from any that I have heard. I am advised that the principals of this concern were affected by the patriotic blizzard which carried some off their feet when the Defence programme was initiated. They were very anxious to share in the production of materials for patriotic reasons, but they had the Quakers' repugnance on religious grounds to any such course. A happy way out was thought of, namely, that they should manufacture without profit, and that would be a salve to their injured conscience. If that is true—and I have it on what appears to be good authority—I am sorry for the conscience, and I am sorry for the cheap salve. If that is the position, it is, in my judgment, a case of rank religious dishonesty and I hope that the statement that was given to me is incorrect, and that these people had really no conscientious objection at any time to the production of arms. But if the Government had an opportunity to obtain armaments at a saving of some £20,000 or £30,000, it was manifestly their duty to take advantage of this offer. We are living in a capitalist age and a manufacturer ought to have a profit. If he is going to maintain his factory, pay for his renewals and extend the advantages of his workpeople, profit making must be carried on, yet any Government


which has the interests of the State at heart is bound to take advantage of an opportunity such as this appeared to offer.
It is not, however, very clear whether an offer was made which would have saved such a substantial sum of money. One Minister declined to state either the price or the freight obtained for scrap. I see no reason for any such reticence. I am certain that I could go to the Baltic Exchange to-morrow and obtain the exact amount of freight that was paid, with the names of the vessels. There should be no mystery in the matter. The complaint is that foreigners, French and Dutch, are employed. That is due to the neglect of British shipowners in not building the most modern type of vessels with very low draught. In the matter of coastal tonnage we are well behind the Dutch and the French in this particular. The sooner the Government look into that side of the question, which is an important one, the better. I asked a question this week with regard to examining the potentialities of our lesser ports, is a cognate question. We have not the requisite coastal tonnage to enable us to compete with other nations in handling goods which should be exclusively handled in British bottoms. Without control, rising prices, rampant speculation and huge fortunes reaped at the public expense must continue. Through inflation the cost of living will rise still further, and the burden of debt laid on the backs of the British people for 30 years to come will be altogether higher than rearmament with national control could possibly have cost. We ask for the elimination as far as possible of private speculation in the production of arms.

8.42 p.m.

Mr. Tinker: This is a very important question and one is sorry that it has not been brought forward at a more opportune time when one is not thinking about holidays and the Chamber is not practically empty. Most of us recognise that armaments are necessary, and we are prepared to do what we can to get them supplied, but the trouble in the mind of the people is that they think that huge fortunes will be made out of the distress of the country. That is what is upsetting our side and the great majority of the people outside, and they ask whether there are no means by which this can be prevented. It is in times like this that

unscrupulous people take advantage of the position and are allowed to get away with it. Without any question at all that happened during the last War, and it was galling to many of us who felt the call of the country to sacrifice our all by giving the best that could be given—our lives—to think that many of those who remained behind did very well out of the country's troubles. Figures are being quoted proving conclusively what happened in that period, and figures have been given by a right hon. Gentleman in front of me showing where it will lead now unless it is checked. I hope that even under what is called private enterprise—unrestricted competition and Devil take the hindmost—the Government will recognise that that cannot be allowed to go on unchecked.
It appears to me that there are two ways in which it hits the community hard. In the first place, increase of prices will put up expenditure if further armaments are required. Prices will have soared, and any future estimate in respect of further requirements will be based upon those higher prices. The type of battleship which now costs £8,000,000, may, if prices are allowed to soar, in the future cost £10,000,000. That will be the meaning of high prices. The extra £2,000,000 will have to be found by the taxpayers. Unchecked prices—though the Government may say that the contracts are there and will not cost any more—will have a serious bearing upon commodities if they follow the trend of increased armaments to which everything seems to point in the state of the world to-day. The Government ought to watch very carefully and try to check prices from soaring. These high prices, even though they may not affect the expenditure of the Government at the moment, are bound to bear heavily upon various sections of the community.
One or two speakers have said that wages may catch up with the higher prices, but there is always a lag. between the two. I will assume that it does so and that the wage earner is able to share in the boom and to get his share of what is going. But there are members of the community who are on a fixed rate of living. I refer to two particular classes. There are the unemployed who have a fixed rate of income which is not likely to he altered for some time. That fixed rate was based upon a level which


obtained before high prices came in. As prices soar so their power of spending in the market is reduced. As coal and everything which is required to produce armaments go up in price, the cost of every article in the market increases. Their standard of living will be indirectly reduced. There are the old age pensioners whose income is on a fixed basis. Probably they have been able to arrange their pittance according to the present market prices, but as profiteering goes on and huge fortunes are made, they will be called upon to pay increased prices. These people will hardly be able to comprehend what is causing their lower standard of living. They will wonder what is happening when they are called upon to pay a few coppers more for certain articles which are so important to them. They look to us to check that kind of thing.
I do not know whether we shall be able to do so or not, but certainly we ought to take every opportunity of making our position public, so that unscrupulous profiteers may consider whither they are being led, and realise that there may be a reaction against them, and that what they are doing so well out of now may be snatched away altogether by the country determining to take the opportunity to profiteer out of their hands. I ask them to be satisfied with a fair deal and a fair rate of profit, and not to take advantage of the plight of the country. I urge upon the Government to take whatever powers they possess to check this kind of thing, and if we on this side of the House can do anything to assist in that direction, we shall be ready to do so. If the Govern-find out that this matter is getting beyond their control and that they require an Act of Parliament to help them to check excessive profiteering, I hope that they will believe me when I say that all the help that can be given from these benches will be given to them.

8.51 p.m.

Mr. Kelly: Like my hon. Friend the Member for Leigh (Mr. Tinker), I urge the necessity for dealing with this matter. Those of us who had experience of the position between 1914 and 1919 realise the difficulty in endeavouring to deal with people who set themselves out to profiteer. Some of us had to appear and give

evidence before those committees which were referred to by my right hon. Friend the Member for Hillsborough (Mr. Alexander) when he spoke this afternoon. It was astonishing that, despite all the efforts that were made by the Ministry of Munitions, by those in charge of shipping and other Departments of State, huge profits were made. Profiteering went on, and there was a great deal that was not to the credit of this country and to the administration of its affairs, certainly in regard to the conduct of industry. We had profiteering rampant throughout the length and breadth of the land. I do not know how the Government are to control these profits unless they fix the prices. An endeavour was made in the early days of 1915 to do this, but the great combines made huge profits even when their books were examined and when very close inspection was made of all their transactions. One must feel very unhappy indeed that, after all the explanations from t he Front Bench opposite by the Minister for the Coordination of Defence, and by those representing the Departments, they seem, up to the moment, not to be able to deal with this matter so as to prevent profiteering.
We listened to the hon. Gentleman the Member for Harrow (Sir I. Salmon), who is chairman of one of the committees dealing with the matter of estimated prices in order to prevent profiteering. It seemed as though he was rather endeavouring to justify the huge profits which have been referred to by my right hon. Friend the Member for West Stirling (Mr. Johnston). We have been told of the profits made by companies like the Bristol Aeroplane Company, and a few others which were named, and we have been told by the opposite side of the House that we ought to have been able to discriminate between the various manufactures of these companies in order to see how much of the excessive profits was made out of other sides of the industry than that which was supplying Government Departments. I believe the hon. Member for Harrow forgot that there are many Members on this side of the House who know what is taking place inside these factories, and know what a small amount of work is being performed by these people other than that carried out to the order of the Government. These profits are being made out of the Government


orders, and it is no excuse or defence at all to say that a portion of these profits may be coming from the work other than Government orders, upon which these firms are engaged. I hope that the representative of the Government will answer some of the questions which have been put to the Government this evening: for instance, that he will deal with the question of the coastal trade.

Dr. Burgin: I hope the hon. Member will put his question, because for some time this afternoon I had to be in another place. If he will put his question about the coastal trade I shall be happy to deal with it. I am most anxious to be of service to the House.

Mr. Kelly: I am grateful to the hon. Member. In regard to the transport of scrap metal we find that instead of vessels under the British flag being engaged for this work vessels sailing under the flag of another country have loaded at Bo'ness and other ports.

Dr. Burgin: Perhaps the hon. Member was not here at Question Time to-day. No boats were loaded at Bo'ness. Boats discharged there. That is a very material difference.

Mr. Johnston: I hope the Parliamentary Secretary does not pretend that there is not regular loading of boats at Bo'ness, Grangemouth, Leith and Scottish ports on the east coast, with scrap and other metals.

Dr. Burgin: What I am dealing with is the suggestion that a number of vessels, mostly Dutch, have been loaded at Bo'ness in recent times. There is no foundation for that statement.

Mr. Kelly: The Parliamentary Secretary may take it that our statement relates to the question of loading or unloading. It is a fact that instead of British vessels being used for that coastal service in dealing with the transport of scrap, vessels sailing under other flags have been utilised. One would like to know whether the Government are cognisant of this thing and whether they have taken any steps to see that our own boats are used for this purpose. If not, why not? Is it because of the lower freight charged? We cannot say, because this afternoon when we pressed for the figures we were told that they could not be given. I

hope the Government will not defend themselves behind what the War Office told us this afternoon, that it is a tradition that they must not give figures across the Floor of the House in regard to the price of contracts or estimated prices. We have had an experience within the last few weeks of a refusal by one Department to tell us what they paid for Lansdowne House, and immediately a pressman went to Lansdowne House and published the whole story in the newspaper on the following morning.

Dr. Burgin: Incorrectly.

Mr. Kelly: I am not sure that it was incorrect.

Dr. Burgin: It was.

Mr. Kelly: The one amazing thing is that such a huge price was paid by the Department for the purpose of using luxury flats for storage purposes. I have had a look at the place recently and have been amazed to find how much is being used in that way. This afternoon the subject was raised about the offer of Messrs. Ransomes and Rapier. I have known that firm for nearly 40 years, both as regards its manufactures and its dealings with the men, and also those who are concerned with the ownership of the place. Are we to understand that the refusal to allow Messrs. Ransomes and Rapier to make shells without any profit or loss to themselves is to be the policy of the Government? It surprises me, in view of my experience with engineering and shipbuilding, to find any firm coming along and making such an offer to the Government. If other firms are prepared to manufacture for the country on this basis of no profit, do the Government intend to refuse to allow them to engage in work required for the nation?
I should like to know what steps are the Government taking to prevent profiteering in regard to machine tools? There are hon. Members on this side of the House who are greatly concerned at the method which is being adopted. We have heard of certain machine-tool makers who have been given almost carte blanche with regard to installing machine tools into some new factories. These firms not themselves being able in their own shops to manufacture certain machine tools, are going abroad and purchasing them from Germany and the


United States. Some of those machine tools, if not all of them might well have been manufactured in this country.

Dr. Burgin: indicated dissent.

Mr. Kelly: The hon. Member shakes his head, indicating that he is not prepared to accept that statement. It is time that some investigation took place. Having been concerned with that particular side of industry and being in close touch with many machine-tool makers, I am surprised to find that some of them might be engaged upon a greater amount of work than they have in hand for the Government. It is surprising to find that while some machine tool makers are not engaged to full capacity others are going abroad and bringing in machine tools from those countries. It may be that the class of machine tools that are being brought in are of a different type. I know that those machine tools can be manufactured here, having spent some years in the manufacture of them myself, but we have not had any explanation. It appears to us a new idea that manufacturers should be allowed to instal not only their own manufactures in a factory but also the productions of other people, foreigners in this case, in the same factory. I hope there will be some investigation and that we shall have the matter cleared up, so that we may feel sure that there is not cultivation of the manufactures of other countries to the detriment of the work people of this country.
Arising out of our experience in 1914–19 regarding to the factories engaged upon munitions of war I should like to know whether the whole cost of the new factories, which are to be handed over to other people to manage, is to be borne by the Government? A short time ago, when we were dealing with another side of the problem, I put that question, and the answer I received then did not satisfy me that every precaution was being taken to prevent those factories from passing into the hands of other people who had not paid a penny towards the cost of their erection. There was a great deal that went astray during the years 1914–1919. I remember on one occasion hearing a telephone conversation in which two people were priding themselves upon the wonderful present they had received from the Government without the Govern-

ment knowing the many thousands of pounds they had handed to those people in machinery and buildings at that time. I hope that will not be repeated on this occasion. I hope that on the question of these factory buildings and machine tools we are to have a reply that will be more satisfactory than anything we have heard up to the present time.
When one considers the price of tin and other metals, it is astonishing that there is not a greater development of parts of the tin mines of Cornwall. Time and again in recent years we have raised that question in the House. Although the county has been worked for tin for 2,000 years, I am told that it has never been developed, and it is well known by the captains—that, I believe, is the title of the engineers there—that there is still an abundance of wealth in tin and other metals in that county. It has not been developed, because those who are in the tin-mining world have found it easier to secure their profits by their investments in Malaya and other parts of the world. They are prepared to neglect their own country when they can get easy money from the tin that is being raised in other parts of the world. That is most unfair to their own country and its people. I hope those who are in charge on this occasion will engage in that investigation now. In 1917, three years after the War began, they were compelled to engage in the development of the tin mines of Cornwall, and the result of their efforts was not unprofitable. I suggest to the Government that it would be profitable if they would engage in it at this particular time.
I wish to join with the hon. Member for Leigh (Mr. Tinker) in his demand that regard should be had by the Government to those people to whom increased prices will mean an approach to, if not the reaching of, semi-starvation—those who are on widows' pensions and old age pensions, and who, during this Coronation period, are not even being considered for the increased allowance that is being given to some sections. In the matter of school grants, for instance, I am amazed that the President of the Board of Education is not considering the question more closely, for the children to whom grants are given will find that these grants are reduced in amount by reason of their reduced purchasing power. I hope the


case of these people with a fixed income of a few shillings will be considered by the Government, even to the point of increasing the benefits. I hope the Government will not wait, as they did during the War, until the burden is too heavy for those people to bear. I hope they will increase the income of these people so that they may be better able to face the increase in prices that is taking place.
I am sorry at this hour to put so many points to the hon. Gentleman, but I feel that, being concerned with many of these factories and with many thousands of men and women engaged in dockyards, arsenals and engineering and other establishments throughout the country, it is my bounden duty to put these matters to the Government in the hope that they will deal with them effectively and for the benefit of the people of this country.

9.12 p.m.

Mr. Mathers: There is another angle of this question which has not been mentioned in the Debate to-day. Naturally the discussion that has taken place has been on exploitation and profiteering at the expense of the Government. We have been reminded of the huge profits that were made during the War by exploitation of the people of this country through the War contractors not being properly controlled. There have been various estimates of the profits made by a comparatively few individuals at that time, and we have seen figures going from £3,000,000,000 upwards. That, of course, represents only a small portion of the profits that were made, since the 3,000,000,000 were left in the hands of a comparatively few individuals after an excess profits tax of 80 per cent had been collected.
I want to look at the discussion from the point of view of the worker, not merely as a consumer, but as a producer, and I wish to ask the Parliamentary Secretary whether he can give us some indication as to how the Fair Wages Clause is administered. The object of that Clause is to see that workers who are engaged on Government contracts enjoy reasonable conditions. When we put the question, "Do wages ever catch up with increased costs?" I think we are faced with the sort of consideration that often occurs to me when I am travelling about the country and come from a subsidiary road on to the main road, always finding

there the sign "Major road ahead." That gallant gentleman always keeps ahead in the same way that prices keep ahead of the workers' wages.
I have in mind an instance of the failure of Government Departments to ascertain clearly whether the Fair Wages Clause was being carried out properly. When I represented West Edinburgh, between 1929 and 1931, I had occasion to deal with a complaint from certain trade unionists working for a very large firm. They complained that although they were working on Government contracts for the War Office, the Post Office and the Admiralty, they were not receiving wages that could be considered as anything like reasonable wages for the work they were doing. It was my duty to take up the matter with those Departments and after some correspondence and investigation, the three Departments, jointly, told the firm concerned that the wages which were being paid were not proper wages under the fair wages clause. The firm was peremptorily ordered to increase the remuneration of those workers to the proper level, and my recollection is that that involved the payment by the firm, to some hundreds of workers, of an increase of 4s. 4d. per week. That happened very shortly before the General Election of 1931, but the fact that I had had some hand in securing that increase of wages did not save me from a very heavy adverse vote in that Election. That is why I was out of the House between 1931 and 1935. [An HON. MEMBER: "Base ingratitude!"] I am afraid that is a quality with which we often meet in political life, but we must be prepared to do what we believe to be right and take the consequences whatever they may be.
In the instance which I have just cited, the excuse made by the Government Departments for not having insisted earlier on the payment of better wages to these people was that the firm concerned was the largest of its kind in the district, employing thousands of workpeople, and that the wages paid by that firm were, therefore, looked upon as the standard wages prevailing in that area. That, in my judgment, is not the proper way in which to judge of whether the wages paid in a particular case are fair or not There should be much closer scrutiny by Government Departments of the wages paid for Government work, and if the Parlia-


mentary Secretary to the Board of Trade can give us some indication to-night that machinery is available and is made use of to see that the fair wages clause is properly observed, it will be a great relief to many of us on this side of the House. We have in mind that in some cases the workers are not well-organised, or, even if they are organised, are not too keen to press for increases of wages because of the fear that they may be victimised, and may do themselves harm in one way or another. In those circumstances the workers may continue to endure conditions which ought not to prevail, and yet all the time this House is under the impression that the fair wages clause is being strictly applied in connection with all Government contracts, and that the workers engaged on work for the Government are receiving the appropriate remuneration. I hope the Parliamentary Secretary will be able to give us some reassurance on the lines I have indicated as to the administration of the fair wages clause in connection with these contracts.

9.19 p.m.

Dr. Burgin: Hon. Members know that the Debate on the Third Reading of the Consolidated Fund Bill can roam over a very wide area, and many of us who have had experience of such Debates in previous years, realise that you may have in them a number of completely unrelated subjects and sometimes unrelated arguments as well, and that it would require an encyclopaedic knowledge to deal with all the questions raised on these occasions. The House, of course, understands that the Board of Trade is not an operating Department. It has no part in rearmament, and my right hon. Friend the President of the Board of Trade cannot, in that capacity, accept any responsibility for the causes of any rises in prices which may occur in the carrying out of that programme. It may be that once prices show a tendency to rise, it will be necessary that steps should be taken, and it is to that side of the matter that I shall address some observations to-night.
Before I deal with the general subject, I shall reply specifically to some questions raised by the last three or four speakers. Let me say at once that in all contracts placed by Service Departments the fair wages clause finds its place, and I know

of no criticism at the moment remaining unanswered with regard to the working of that clause. If criticism were brought forward from any quarter I can give an unqualified assurance that it would at once be investigated. There is no difference of opinion between the two sides of the House with regard to the desirability of seeing that, when the fair wages clause is incorporated in contracts placed by Service Departments, it is properly fulfilled, and carried out in the spirit as well as the letter. I hope the hon. Member for Linlithgow (Mr. Mathers) will feel that that is an assurance on the lines which he would desire.
The hon. Member for Rochdale (Mr. Kelly) raised a number of questions. He asked me about the coastal trade, a subject mentioned earlier by the right hon. Gentleman the Member for West Stirling (Mr. Johnston). We are all anxious that as far as possible goods, particularly in coastwise traffic, should be carried by British vessels. We are anxious that our ports should be capable of handling the traffic which is available, and I think it will be agreed that instead of having tremendous schemes of dredging to make what are essentially shallow-water ports available for deep-draught vessels, it should be our policy to build more shallow-draught vessels for shallow-water ports. An hon. Member expressed the view that in some cases British shipbuilders or shipowners had been caught napping in not having built the type of vessel suitable for some of the shallow estuaries and shallow-water ports round our coasts. The fact is, I think, familiar to the House that the coastal trade of a number of countries is open to vessels flying the Red Ensign, and it would be a mistaken policy on the part of His Majesty's Government to shut out from participation in our coastwise traffic vessels bearing the flags of the countries which permit our vessels to take part in their coastwise trade. Where it is possible to use persuasion that merchants and shipowners engaging in their own traffic should specify British vessels, that persuasion is given. I have not ceased on shipping occasions to preach the doctrine of utilising, where possible, British tonnage, and I regret that there does seem to be in this movement of scrap from some of the Scottish ports to which the right hon. Member for West Stirling referred quite a considerable


amount of traffic in vessels flying foreign flags.

Lieut.-Colonel Kerr: I would be most grateful to the hon. Gentleman, in view of the fact that this question is very material to my own constituency, if he would tell me the countries where British vessels are allowed to embark on coastwise trade?

Dr. Burgin: The answer was given in response to a Parliamentary question quite recently. I would not like to charge my memory with a complete list. Holland is certainly one, and the vessels to which our attention has been called are vessels flying the Dutch flag. I will give the hon. Member a list, but there are many countries where our vessels have free access to the coastal trade. The Government are not in any way concerned in these shipments of scrap. They are private orders given by private firms who arrange their own shipping under the terms they make with their vendors. I hope that the hon. Member for Rochdale was not suggesting that the Government were concerned.

Mr. Kelly: I was not suggesting that, and I was not asking that the other people should be shut out, because I quite realise that there are times when they are useful. I was only asking that our own vessels should not be passed over completely.

Dr. Burgin: I am much obliged. I felt that the hon. Member would be much too well informed to put the other suggestion forward. Let us encourage the use of British vessels, and if British vessels of this shallow depth do not exist, let us encourage their construction.

Mr. Johnston: Is there not another consideration which enters into the mind of the Government, namely, that in the carrying of scrap, pig iron and fire bricks the vessels flying the Dutch flag escape paying Income Tax, they travel with a third fewer engineers and seamen, and in the event of an ultimate war we might be placed in a very serious position if we did not have coastal vessels of our own?

Dr. Burgin: I think that all those points were covered by the answer I made. In many cases the particular type of tonnage required does not exist, and I have been doing what I can to encourage its construction.
The hon. Member for Rochdale then passed to the question of the machine-tool trade. I think the machine-tool trade has played very fairly, and is cooperating in accordance with our wishes. I have no wish to make any complaint about the services which are rendered by the machine-tool makers of the United Kingdom. There are gaps, very naturally, in the manufacture of machine tools. There are a number, particularly of the automatic machines, in which we have not specialised, and the construction here would be extremely expensive, the time delay would be long, and the number of machines ordered in consequence, once the particular type had been put into manufacture, would not make it an economic factor to produce them. In cases of that kind I should have no hesitation in recommending a manufacturer who was about to switch over to a new type of trade to procure his machine tools as quickly as possible.
The hon. Member for Rochdale knows that if he went to Coventry now he would be quoted 48, 50 or 52 weeks' delay, and it may not be long before greater delays are quoted not only by the manufacturers here but in the United States and on the Continent. Side by side with the return to prosperity in America the demand for machine tools increases enormously. It is certainly a word of advice to give to anybody who is equipping a factory that he should get his machine tools quickly, because world demand is increasing. But the hon. Member for Rochdale is entitled to an assurance that this whole question is constantly under supervision. It is a matter which is referred to regularly at the Board of Trade in reports received from industry. I can give the House encouraging reports on this question.
The hon. Member asked about buildings for the use of armament manufacturers, with which I am not competent to deal. I hope he will allow that question to be conveyed to the Defence Minister responsible. It does not fall within the realm with which I have been asked to deal to-night, and I can only pass it on to one or other of my right hon. Friends. When he comes to metal I can deal with that, and I will do so generally later on. The hon. Member for Leigh (Mr. Tinker) made a most interesting, helpful and reasonable speech. I find myself in entire agreement with every word of it. I take note of his assurance that were we in


any doubt as to our powers to deal with excess prices we could come to the House and count on the assistance of him and his friends to pass the necessary legislation. The Debate to-night has ranged over this whole question as to whether prices are being allowed to be uncontrolled, whether the Government have been responsible by their armament programme for some of the rises to which attention has been called, and whether that rise in prices has been materially contributed to by the action of speculators.
I want, quite shortly, to give some information to the House from rather a different aspect. The thesis which I want to put to the House is not that rearmament has caused this bounding in prices, not that there is intensive profiteering on the part of armament manufacturers and Government contractors, not that speculators have played a large part, but that these influences are relatively slight and that if we want to find what has happened in the world we must look further afield. Commodity prices have risen generally with few exceptions. The movement began in 1936 concurrently with the commencement of industrial recovery in our own country, and was stimulated very much by the return of industrial activity in the United States of America. The rise in prices has increased with greater velocity owing to various features which have arisen since. Between 1931 and 1936 there was a greatly reduced demand for primary products. An accumulation of stocks in nearly all the more important primary products resulted, and the primary producers, in order to protect themselves, with these large stocks on hand, resorted to systems of reducing production—rationalisation, cartel schemes, all kinds of schemes were resorted to, because in each trade market for a primary product a large accumulation of stocks was hanging over the market depressing the prices.
Now these measures—international schemes, most of them—had the result of reducing those world stocks, so that when the demand revived the position with regard to commodities was fairly strong. There was an upward tendency in price levels, because, stocks having been consumed, immediately there was industrial activity demand outran supply. That is precisely a set of circumstances

known to all economists in which a rise in prices must inevitably follow. That was a very desirable movement within limits, very desirable indeed. Within limits, every individual in the world desires that those who produce primary products, whether metals won from the ground or crops raised from the soil, should gain a bigger livelihood, should have some surplus at the end of the year, and should be able to be the greatest possible consumers of the industrial goods made by their fellow workers in the towns and cities.
The Government rearmament proposals were announced on 16th February of this year, and half the case made by hon. Members opposite, with the suggestion that the rearmament programme has been responsible for this, that, and the other, tumbles to the ground at once if you show that the rise had occurred before the announcement was made. I have shown the rise in prices as beginning early in 1936 and continuing with increased velocity right through, and the announcement was made by the Chancellor of the Exchequer in this House on 16th February, 1937. Immediately the world became seized of the fact that there was to be an extensive rearmament programme, you had two factors at work. You had a tendency for consuming industries to cover their anticipated requirements, and, as is so often the case when there is a bit of a flurry introduced into the market, you had industries going to more than one supplier for what was eventually intended to be only one order, and you had inquiries made in five, six, or seven directions when in reality the consumer only intended to make a contract in one of them. The tendency was to force up prices, and the consuming industries covering for what they thought would be a shortage in their own materials, accounts for far the greater part of the rises to which we are referring and is not debitable to the Government in the least degree in the world, but is the natural play of the forces of supply and demand.

Mr. Bellenger: Government restriction of production.

Dr. Burgin: The hon. Member cannot interrupt and say that. I have shown by a logical sequence that this has arisen, by far the greater part of it, out of con-


sunning industries placing orders with producers for what they anticipated would be their requirements. I believe that the intervention of speculators has played a very much smaller role than hon. Members opposite appear to believe. The information at my disposal is that speculation, by way of a purchase with intention to re-sell at a higher price, has been extremely limited, and I think the looseness with which hon. Members talk of exploitation and of profiteering is rather deplorable. I invite hon. Members who are going to make allegations of speculation to look into the facts and to find an instance. None have been quoted to-day. Probably the absorption of primary products by the United Kingdom defence programme has had little, if anything, to do with the increases in price. I wanted to make that point clear. The announcement of the Chancellor of the Exchequer was on 16th February, and I have had careful preparations made of the Board of Trade weekly index returns for the weeks that have followed that announcement. I do not want to give details, but I have certain conclusions. Prices were showing a firm upward tendency from June, 1936, to the middle of February, 1937. The advances in respect of certain primary commodities helped to raise the index, but there is no evidence that prices of those primary commodities, except perhaps the non-ferrous metals, have continued to rise at any accelerated rate during the weeks since the Chancellor's announcement with regard to rearmament.

Mr. Benson: In metals, surely?

Dr. Burgin: I said, except in regard to non-ferrous metals. It is difficult to determine how far price increases which may enter into rearmament schemes have been due to shortness of supply, to speculative influence, or to a combination of both, or are debitable, as I believe, to the desire of manufacturers to secure supplies at best prices, but close scrutiny must, of course, be paid at all times, particularly by the Board of Trade, as the consumers' Ministry, to see that those prices do not get out of hand.
Attention was called to metals, and I want to say a word or two with regard to them. I would ask the House to remember that in so far as there was a restriction—and in tin there was a restric-

tion scheme—it was an international scheme. I want the House not to have the impression that the tin scheme was one which it was within the power of this Government to deal with alone. This Government is not satisfied that to deal with it at all would be wise, and even if it were, it would not be able to do so without the co-operation of a number of other Governments. I think a very good case could be made out for the maintenance and continuation of the tin scheme. I have gone into it in a good deal of detail for the purposes of this Debate, and I am satisfied that the suspension of the tin scheme would not materially increase production and would create great difficulties, whereas I believe the activities of the tin market to be of temporary duration.

Mr. Alexander: How does that really work out? The hon. Gentleman says he does not think the suspension of the tin scheme would improve production, and yet we are faced, on the one hand, with the statement that we are short of metals and on the other, with figures showing that within a few weeks the price of tin rose from £230 to £300. What does the hon. Gentleman mean?

Dr. Burgin: I mean exactly what I said. I mean that the tin scheme, which was initiated because the production was proceeding at a greater pace than the consumption, because stocks were piling up, and because prices had fallen to a hopeless level, was advantageous, that it kept the price manageable, that it kept production and consumption within measurable distance of each other, and that it kept a steady market. Of course, a buying by consumers to accumulate stocks, simultaneously bidding against each other, will put a price up temporarily to absurd levels. Even so, this rise in tin is not very different from that of other metals. Tin, copper, lead and spelter are not rising to abnormally different levels the one compared with the other, and I am satisfied, from information that I have in my possession as to the consumption and production for 1937, that the right steps are being taken. I say again that the suspension of the scheme would not appreciably increase production, but it would create great difficulties in the tin market as soon as conditions, which I believe are temporary, have ironed themselves out.

Mr. Alexander: Will the Parliamentary Secretary tell us what percentage of restriction there is in the tin industry?

Dr. Burgin: It is not done by percentage. The visible supply of carry-over at the end of the year and the probable consumption are calculated, and the rates of quota are arrived at. The rate of quota for January, 1937, was 100 per cent. The figures are all worked out on a table from 1908 onwards. They show that the scheme is operating successfully, and that the Committee in charge of the scheme are doing everything they can to meet the situation of an increased demand for tin. I say that, in so far as that increased demand is not a real demand, but represents a number of consumers bidding against one another and putting their own prices up, this is a temporary situation which will work itself out. Let the House realise that just in the proportion in which you increase the price of an article, so you put a premium on producing more of it, which in its turn tends to lower the price. When, as the result of these Debates and other matters, the necessity of not buying against one another becomes more and more apparent, the demand to bid against each other will cease and the price will fall, and the particular price of £300 for tin will become temporary.
I have the details of all the non-ferrous metal prices. but the answer to the House is the same in all. The primary cause is the increase in world demand owing to industrial activity, not merely here, but in the United States of America. It is sometimes suggested that the Government should control prices. In nearly all these metals we rely on imported supplies. Consequently to talk of a control of prices by our Government is not possible. These are world prices, and isolated action on our part would merely result in our not procuring the metals at all. In the War of 1914–18 things were different. The Government acted as the buyer not only for ourselves, but for our allies. They were in control of a very large part of the demand, but that did not prevent large increases in prices. The prices of non-ferrous metals have been steadier during the last week, and the first wave of excited buying has exhausted itself. The increased prices now obtainable will mean that more supplies of these metals will come on to the

market and prices will tend to fall. It is the fluctuation of prices within wide limits which is the annoyance, and not the particular level at which a commodity will be pushed as the result of increased world demand.

Mr. Alexander: The Parliamentary Secretary says that there cannot be any effective Government control because practically all the metals come from overseas. Is it not true that the majority of these base metals come from British territory—Malay, Nigeria and Africa? I am speaking of copper, tin, spelter and, in some degree, of lead. We have some information that there has been heavy speculation in London by people buying commodities without ever intending to hold them. I say that the Government could control that, and unless they can give us an assurance that it is not affecting the armament programme costs, they ought to give the House an assurance that they will take steps to deal with it.

Dr. Burgin: The House will understand that I am not dealing with armament profits, but with the rise in price of raw materials. I am dealing with that which falls within the cognisance of my Department. I made that clear at the start of my observations. The distribution of these metals is well known. It is a delusion to think that the greater part of them come from British territories or the British Empire. Copper comes largely from Belgian Congo, Chile and the United States of America. Of course, there are supplies within the Empire.

Mr. Alexander: Very good supplies.

Dr. Burgin: Certainly, but that does not meet the argument. If you are dependent on imported supplies, they are subject to the world price. It is idle to talk of the British Government controlling or fixing prices. It is a complete intellectual delusion. It is a very attractive platform method of trying to rouse the enthusiasm of an audience, but it is fallacious in the extreme. It will not bear examination. These metals which are essential to the various programmes which the Government have on hand, and also essential for ordinary industrial purposes, command the world price, and anything short of that price will result in the purchaser not securing supplies.

9.52 p.m.

Major Procter: I should like to congratulate the Board of Trade on the excellent work they have done during the past year. I believe that at long last the Board is Lancashire-conscious, and it is in order that they should not forget one or two things that I rise, because, as the old saying has it:
A thousand good things done, but one forgot
Wipes out the others with a blot.
Before I mention those things, I would like to ask a question with regard to profiteering. I believe that the method which was in operation during the War is not now being followed in fixing the profits of manufacturers. During the War disaster was caused by a system of basing profits on a percentage of the cost of materials and wages. The desire to prevent profiteering in armaments is very laudable but unless we discourage any- thing remotely related to the old system, which increased profiteering all along the line, it will be disastrous to our export and other trades. If the old system is permitted then if the costs of materials and wages rise the profits of the manufacturer will be greater. I am concerned lest our export trades which, after all, have to pay for the new Defence armaments, will be adversely affected. Already I understand that there are being drawn off from the export trades engineers and other workers who are attracted by the high wages in the armament factories. There is a disparity between the wages of those employed in the export trades and of those engaged on armaments. This may cause a great deal of discontent and 1937 may be a year of industrial unrest, which we wish to avoid if possible. I believe in high wages all along the line. Our factory operatives in the cotton and engineering trades should have the highest wages consistent with the prosperity of industry, but I do not want the employers in armament firms to be able to attract workers from other industries, because they have a monopoly and knowing that the higher the wages they pay and the more they pay for their materials the greater will be their profits.
In the second place I should like to ask whether the Board of Trade mean to do more to prevent Japanese textiles coming into this country and being printed here and then shipped to our Colonies as British goods. I understand that some-

thing was to be done to prevent cotton goods being designated British unless they had been "spun, woven and printed" in this country. Is it possible for the Board of Trade to insist that Japanese textiles exported to our Colonies shall have an indelible mark in the selvedge, or somewhere else, so that buyers may know that they are Japanese goods, no matter how they are printed or otherwise disguised?
I should also like to bring to the attention of the Board of Trade the great desire of the development associations in Lancashire to co-operate with the Board of Trade in helping industries in this country. Why should foreign manufacturers who wish to open factories in this country have to rely upon the London Chamber of Commerce to guide them? When foreigners feel compelled to open factories in this country in order to secure a market which otherwise they would lose through our tariff policy, they write to the London Chamber of Commerce, who naturally desire as many factories as possible to be established in London. We in Lancashire have in past years had the residue after London has been served. If the Board of Trade cannot exercise control in this matter we should like them at any rate to guide these foreign manufacturers to areas where there are still large pools of unemployed labour. In Lancashire we have the best and the most willing workers and we will give foreign manufacturers greater advantages than they can get anywhere, even in London. Within 'co miles of Manchester there is a larger population than there is around London. Therefore, I hope that, if possible, the Board of Trade will not continue to allow this important national work to be done by the London Chamber of Commerce but try to take a hand in it themselves.
Whilst speaking on the work of development associations, I would point out that owing to the peculiar working of the law a town council, with the object of attracting industries to the borough, can use its money to recondition factories, but an urban district council cannot do so. Accrington, through its wide-awake development association, took over an empty derelict cotton mill, reconditioned it and made it into a modern trading estate. It was taken over by a French firm, and it will give employment to Accrington people. But there are three


urban districts in my division, Claytonle-Moors, Oswaldtwistle and Rishton, where there are a large number of unemployed. They have progressive councils, desirous of reconditioning their derelict mills and making them attractive to industry. We believe, indeed we know, that if this can be done it will ease the position as regards unemployment, but, unfortunately, the urban district councils have not the requisite power.
I wonder whether the energetic Parliamentary Secretary of the Board of Trade could look into this matter and suggest some way of enabling these urban district councils to help him to assist trade and reduce unemployment even more effectively, and with far less worry so far as my division is concerned. Taking things all round, I have nothing but congratulations to offer to the Board of Trade for the splendid work they have done for Lancashire during this year, and I hope they will carry on with that good work during the years to come.

10.4 p.m.

Mr. Owen Evans: I rise to make one or two observations on the very important subject of the fluctuating prices of non-ferrous metals. I was very much impressed, as I always am, with the lucid, clear and effective explanation of the situation given by the Parliamentary Secretary, and in the main I must agree with him, though on some points, perhaps, I differ. I am sure that the whole House will sympathise with the anxiety of hon. Members about this question, because it is very important that the House should be satisfied that these rapidly rising prices are not due to any deliberate profiteering on the part of any individual firm or company.
There is one misconception which I hope my hon. Friends above the Gangway will permit me to clear up. In view of the Government's rearmament programme, involving an enormous expenditure of public money, it is, I think, important for the House to appreciate in what way that money is being spent—how it is being spent, and upon which it is being spent. I am sure it will then be realised that the proportion of the expenditure on raw materials is remarkably small compared with the total expenditure upon the finished products. Had I

realised that this Debate was going to take place to-night, I could from my own personal experience have produced to the House real figures to show, for example, what prooprtion of the money is spent upon non-ferrous metals—on copper and nickel and tin and aluminium—as compared with the cost of the finished article, like a battleship or a cruiser. Quite apart from any party question, it is very important that this distinction should be realised. If you had the figures concerning all the operations involved in producing the finished product in the rolling mills, the casting and the smelting and so on, you would find when you analysed the cost that the cost of the raw materials is a very small proportion of the total.

Mr. Kelly: It has meant an increased demand by reason of the munitions programme. It is not only the actual order, but because the enormous sum devoted to armaments has given the world the impression that more and more will be required.

Mr. Evans: I am not dealing with the world impression. In analysing these matters we must, in this House at any rate, deal with facts, and not with wrong impressions in the world. I am quite willing to concede to my hon. Friend above the Gangway that to a large extent the increase in the price of copper, for example, is due to a wrong impression of the quantity of copper that will be required by the Government programme. But I want my hon. Friends above the Gangway to realise that one of the main items of the finished cost in any rearmament will be labour—the cost of direct wages spent on the actual product, as well as the cost of indirect wages on fuel and matters of that kind. That has a very important bearing on the question of the prices of metal. I am not going into the tin scheme, because frankly I do not know sufficient about it.
I am sorry my right hon. Friend the Member for Hillsborough (Mr. Alexander) is not present. I know he brings to bear upon these things a real analytical mind, and he is quite fair in discussing them. But I do say this, that the prices of materials, such as copper, are not due to any large degree to speculative influences in London. I am saying this after having made some personal investigations. It is a matter which deeply concerns many of us. I happen to be associated with a


company which is, I think, the largest producer of copper in the world to-day. The result of the investigations I have made, and which have been made by my friends who have very thorough knowledge of these matters, is that the increase in the price of copper—which frankly I and those with whom I am associated deprecate—is not due to speculative in fluences, except to a limited degree. I am told that it is a figure of £3, £4 or £5 per ton. The real cause has been that the world was caught napping, and no person could have foreshadowed the immensely increased demand for copper after the serious depression through which the world has passed—both the United States and England. Because the demand for copper has not been due to the rearmament programme at all, but has been due to the general increase in prosperity of this country, of America, and of other countries of Europe. But the world was caught napping, and immediately it was found that there was a fear of shortage the British Empire producers increased their production.
I think that all the producers deprecate this wide fluctuation in the prices of materials. We know that it upsets everybody. Those who convert the copper into the finished product desire a stabilised price for copper, and in some instances there are metals, which are very important in rearmament, the prices of which are stabilised, and which can be stabilised by the action of the producers themselves. I cannot see how any government—say a government which would represent the views of my hon. Friends above the Gangway if they were in power to-day—could stabilise the price of metals which are produced in various countries of the world, and which are imported from those countries to this country, to Germany, France, other continental countries and the United States. It would certainly be an unwise policy to say that this country would not permit any copper to come in, at a higher price than x pounds per ton, because the result would be that that copper would be diverted to other markets, to the best markets it could find. And indeed it would be unfair.
I emphasise again that the influence of the price of these non-ferrous metals upon the total cost of the Government's armament programme is greatly exaggerated,

because much the greater portion of the cost is due, not to the cost of the raw materials, but to the cost of the finished products, measured by the wages paid,. both directly and indirectly, by the manufacturer. All those who are producing, these metals would, I believe, without exception, if it could be done by international arrangement, like to have the-price, say of copper, stabilised, but my hon. Friends below the Gangway will realise how difficult it is to bring about such an arrangement. I know from my personal experience that what the consumers, for example, in the Birmingham area, as well as in other areas, need today is a reasonable price which they know will last for a period of time and will enable them to contract for their products, for, say, 12 months.
Has the House realised what a small part of the cost of the rearmament programme is due to the non-ferrous metals? Take copper. I am not in the secrets of the composition of the alloys which are being used in engineering, for tanks and ships required by the Admiralty, the War Office and the Air Ministry, but every technical-minded man who is used to these things will have some close approximate idea of what the percentage is likely to be. I should think I am not far wrong in suggesting that the total amount of copper in a battleship is not 2 per cent. of its total weight.

Mr. Kelly: Not as much.

Mr. Evans: The hon. Gentleman says that it is not as much. I do not know whether any hon. Member can tell me the average weight of a tank. I will put it at 10 tons, although I should think that the average weight would be higher. I say, again, that the weight of copper in the tank will not exceed 2 per cent. of the total weight. If a government builds' 5,000 tanks, with a total weight of 50,000 tons, the total weight of copper will not be more than 1,000 tons. The same is true of other non-ferrous metals. The nickel producers have succeeded in stabilising their prices. They have even brought down the price by about £20 per ton, although they could have advanced it by £70 per ton. That is the result of the co-operation and co-ordination of nickel producers. The producers of other non-ferrous metals could have had the same advantage as


they have had. I have made these observations because I was greatly interested in the speech of the Parliamentary Secretary and I thought they would throw some light upon the importance of this subject and of the measure of its importance in the rearmament programme.

10.20 p.m.

Mr. Gallacher: I notice that when there is any question of profits, hon. Gentlemen below the Gangway fall in loyally behind the main army. That is something which we shall always be very attentive to notice. From the story that has been told, it appears that during all these many years we have been under a strange delusion—that there was profiteering during the War. It is said that the bulk of the money goes in wages—

Mr. O. Evans: I never said a word about the War, or about profiteering.

Mr. Gallacher: The hon. Member has just been showing us, in what he considers to be a very careful statement, that very little of the money spent on munitions is spent on anything but labour.

Mr. Evans: I never said that there was no profiteering now. I only said that the main cost of the finished articles in the rearmament programme is labour, both direct and indirect. There may be profiteering about that; I do not say that there is not; and I quite sympathise with the anxiety of the House to prevent it.

Mr. Gallacher: I would advise the Parliamentary Secretary, of whom the hon. Member seems to have a very high opinion, that when he comes to give a lecture on production and prices, he should at least know a little about his subject. What are world prices? Is there a Committee somewhere deciding world prices, and are those the prices at which raw materials come into this country and go to the manufacturers? World prices are decided by all kinds of rotten speculation, all kinds of fraud. They are decided on the Stock Exchange—

Mr. Magnay: What about coal?

Mr. Gallacher: In this country, in America, and in other countries the speculation goes on. We have been told

that, in the case of copper for instance, prices started to rise before this programme, but those who were speculating knew long ago, or at any rate a considerable time ago, that this programme was going to be projected. We have the peculiar story that the increase in the price of copper is determined by demand in America, and not by demand here—that the enormous expenditure to be incurred in this country is not a cause of the great acceleration of the increase in prices. But if you have, added to the demand from America and Germany, an enormous demand from this country, immediately speculators will get busy and prices will rise. If you are going to stop profiteering, you have to stop the speculator. The hon. Member said there was a big jump in the price of copper because of a wrong impression about the amount needed.

Mr. O. Evans: The consumption of copper last year reached a high peak, and that was before the armaments programme was announced at all. It is not increasing this year. The rate of consumption now is practically no higher than it was last year.

Mr. Gallacher: You created the impression that the tendency was for a greater amount of copper to be produced than was actually likely to be in demand. Then, although there is no likelihood of a very considerable increase in the consumption of copper, you say it is not possible to regulate the price by laying it down that they will only accept copper at a given rate. Surely, if there is not going to be an increased consumption, there is sufficient copper within the Empire to allow of the Government establishing control of that kind. There is sufficient to meet the needs of the moment unless there is going to be a very great increase in the armament programme, and that is what they are trading on and what is sending up prices.
Then we come to the statement made in connection with the offer of Ransomes and Rapier. The Secretary of State tells us that it was of such an astounding character that it is inconceivable that anyone should have made it. They have all become so wedded to the idea of profit that it is inconceivable that anyone could make such an offer. He told them it was too cheap, so that we can declare to the country from Land's End to John


o'Groat's, or from Cairngorm to Ipswich, that the diligent watch dogs at the War Office have saved the country from the awful calamity of getting its raw materials too cheap. Other hon. Members have told us that the employers were so patriotic that they would never dream of profiteering for the sake of profiteering. They were prepared even to make sacrifices in order to help the nation to get its armaments—the employers who for profit have destroyed four great areas! They do not know the meaning of the word patriotism." Go and tell the people in South Wales that the patriotic employers who for the sake of profit have destroyed their areas will make sacrifices to help the Empire.

Mr. Magnay: Does the hon. Member suggest that employers in the North-East district destroyed the area in which they make their living?

Mr. Gallacher: I say that the employing class have destroyed four areas. Who destroyed them? Was it the workers?

Major Procter: rose—

Mr. Speaker: The hon. Member had better be allowed to make his speech without interruption.

Mr. Gallacher: Is Builders Securities Limited for building up or destroying areas? There is the Lancashire Cotton Corporation. Is that for building up industries for employment? I had experience of dealing with patriotic employers during the War. I was a trade union official. I remember that at one meeting, when we were discussing wages, it was stated that the bulk of the money went in wages. I was a skilled man, and I did not get high wages. They used to talk about engineers getting fancy wages. I was working at some of the most intricate and delicate work in connection with submarines and airships, and I was getting £2 18s. a week. [An HON. MEMBER: "Quite enough."] If that was quite enough for one who was working, what about those who were dodging? I remember that on the Clyde, when we were meeting the employers round the table, one employer gave us a nice lecture on patriotism, and how necessary it was to carry on the good work. That very employer—and I could give his name and particulars—after heavy howitzer guns had been lying at the goods station for three weeks because he had refused to

take them from the goods station to the engineering shop to finish them, told the Government to raise the price 30 per cent. This was the fellow who had lectured us. We had experience all through the War of enormous fortunes being made while workers were sweating at miserable wages. No increases of wages were allowed at all. Bonuses were given now and again, but wages were kept rigidly to a level while most outrageous fortunes were being built up.

Mr. Leckie: What about the Excess Profits Duty?

Mr. Gallacher: They were still piling up.

Mr. Johnston: Three thousand millions.

Mr. Gallacher: The Government had to pay the contract prices. I knew many contractors who, when they got into the swim, were great and wonderful men, and piled up millions. When they got their millions they handed out a few thousands to the political funds, and then a title followed the millions. I want to make a suggestion in connection with profiteering. Every hon. Member who has spoken in this House says he is against profiteering and does not want to see it indulged in. We made a proposition during the War to the then Minister of Munitions, and I will make the proposition again, if the Government are in earnest in stopping profiteering. I suggest that in connection with all contracts and with the running of industries—enormous profiteering goes on in connection with industries, apart from the cost of raw materials—the books of the companies should be open to the representatives of the trade unions in the factories, that those trade union representatives should have the most open and complete accession to the books. They should be entitled to make reports on the character of the work that is being done, on the amount of profits being made, and on the wages that are being paid, and also to make recommendations through their trade unions to stop all kinds of profiteering, and to ensure an adequate wage to those who are employed.
We are going to be faced not only with a shortage of copper and various other raw materials but also with a shortage of labour, and the question of dilution will come up. During the War, dilution was used for the purpose of bringing down and keeping down wages. It will be used


for the same purpose again. The Parliamentary Secretary has evaded the question of profiteering. He told us that everybody was pleased that prices went up for primary products, and that everybody wanted to see the primary producer getting a better price. Where is the primary producer getting the benefit either in connection with metals or the production of food? As far as food is concerned, for instance, can the Parliamentary Secretary tell me that the primary producer is getting a better standard? Are the primary producers in Canada any better off? The primary producers in Alberta and Saskatchewan are bankrupt. The profiteer and the speculators are getting all the benefit. So it will be in the factories.
If there is a shortage of primary products, the speculator takes advantage of it, and farmers in many cases are ruined. If there is a shortage of labour in the country the profiteers take advantage of it, and they will do it again unless we are able to get in the factories the necessary control through the trade unions and the workshop organisations which the trade unions are capable of setting into being. Therefore, if the House really wishes to protest against profiteering and to assist in putting a stop to it, it will see to it that every assistance is given to the trade unions throughout the country to set up in all the factories where Government work is in hand factory committees, representing the trade unions and the workers in the factories, with full power of investigating into everything that is going on in the factories, including the profits of the firm, and to ensure that in any labour shortage no diluted labour comes in except under conditions that will not, and cannot, in any circumstances militate against the wages and the conditions of those who are already employed in the factories.

10.39 p.m.

Mr. Magnay: I wish to intervene only for a few minutes, but there have been some remarks made to which I take exception. At the beginning of the Debate I made a remark in connection with the speech of the right hon. Member for West Stirling (Mr. Johnston). I said that we might have expected that there would be some measure of profiteering, just as there was when the Labour party brought in their big housing scheme when John

Wheatley was at the Ministry of Health. The country was told that L000,000 houses were to be built, and at once the prices of all materials connected with the building trade went up amazingly. For example, the price of bricks went up to 75s. a thousand. The result is that to-day we are paying in rents twice as much as we should have been paying if there had not been profiteering in that respect.

Mr. Johnston: Surely the hon. Member was not in the House when a very detailed reply on that point was given by my right hon. Friend the Member for Hillsborough (Mr. Alexander). Hon. Members who were in the House at the time will remember that John Wheatley and the Government introduced a Measure to suppress profiteering, but that that Measure was strangled by the hon. Members friends.

Mr. Magnay: That does not affect the force of my argument. Whatever party was in power, as a consequence of that profiteering we paid, instead of an average of £500 a house, a sum well over four figures. This generation and the next generation will have to pay increased rents because of the profiteering in building that went on at that time. I agree heartily and sincerely, as does every hon. Member on this side of the House, that every measure should be taken to prevent profiteering, as every measure was taken during the Great War. I regret that I am not as regular in my attendance in the Estimates Committee as I should be if I lived nearer London, but I have been there often enough to hear the heads of the spending Departments explain that every measure that the wit of man can devise—measures inspired by the bitter experience through which we went during the last War—and every device that can be thought of by expert accountants and trained Government servants has been applied in order to keep down profiteering as much as possible. The right hon. Gentleman also mentioned that a company was being floated in Glasgow, and he asked the Government to do something about it, as it was, in his opinion, something in the way of profiteering. He said there were to be 400,000 shares at a premium of is each. I happened to know something at first hand about that project about three months ago.

Mr. Johnston: It was not a question of 400,000 shares. The hon. Member does not know that much about it.

Mr. Magnay: The right hon. Gentleman gave that figure.

Mr. Johnston: I said £400,000, which is a different thing.

Mr. Magnay: Four hundred thousand 4s. shares at a premium of is.—I saw the prospectus in draft, and that is my recollection of it. Reference was made to a "rake-off" of £20,000, but that does not affect the matter at all. If I had the money to spare and took a taxi to my hotel to-night, the fare would not be altered by the fact that there had been a change in the ownership of the taxicab. If a man had bought that taxicab for £50 more than the original price the legal fare would not be altered, and the cost of the product of a factory is not altered by the fact that the shares are sold at a premium. When it is said that there is a £20,000 "rake-off," it sounds like a lot of money, but stamp duty, counsels'

and solicitors' fees, advertising and so on have to be paid, and there is not a great deal left over after the company has been formed and the working expenses have been met. I conclude by saying that Members on this side of the House are just as keen as hon. Members opposite to see that there is no profiteering.

Question, "That the Bill be now read the Third time," put, and agreed to.

Bill read the Third time, and passed.

The remaining Orders were read, and postponed.

ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Captain Waterhouse.]

Adjourned accordingly at Twelve Minutes before Eleven o'Clock.